What Is A Pledge Loan From Navy Federal
A "pledge loan" from Navy Federal Credit Union (NFCU) is a type of loan that is secured by the borrower's savings or certificate of deposit (CD) account held at NFCU. In other words, it's a loan where the borrower uses their own funds as collateral to secure the loan.
Here's how it typically works:
Collateral: The borrower pledges a certain amount of their savings or CD balance held at Navy Federal as collateral for the loan. This provides security for the credit union in case the borrower defaults on the loan.
Loan Amount: The amount the borrower can borrow is typically tied to the value of the pledged collateral. Navy Federal may offer a loan amount up to a certain percentage of the pledged savings or CD balance.
Terms and Interest Rates: The terms and interest rates for pledge loans from Navy Federal can vary depending on factors such as the borrower's credit history, the amount borrowed, and the repayment term. Interest rates for pledge loans are often lower compared to unsecured loans because they are secured by collateral.
Repayment: The borrower is required to make regular payments toward the loan according to the terms of the loan agreement. Failure to repay the loan as agreed may result in the credit union seizing the pledged collateral to cover the outstanding balance.
Pledge loans can be a useful borrowing option for individuals who want to access funds quickly without liquidating their savings or CD investments. However, it's essential to carefully consider the terms and implications of using your own funds as collateral before applying for a pledge loan.
Comments
Post a Comment