What Is A Share Secured Loan: All You Need To Know

How great would it be if we could take a loan using our savings as collateral and then reclaim the collateral when it’s done? Read ahead to learn more!

Managing finances can get extremely challenging if one doesn’t get the right guidance. Loans have become an essential part of our lives and help a lot in covering ends here and there!

The downside, though, is that unsecured loans are pricey but the secured ones require some sort of asset as collateral. This can get agitating if you don’t have a valuable asset that you can put non the line.

With a share secured loan, you won’t have to worry about that! Keep reading to find out what is a share secured loan and learn more about share secured loan rates, the share secured loan technique, and then ask yourself, is secured loan a good idea or not.

What Is A Secured Loan?

Before we jump into the dynamics of a share secured loan, it is important to know what a secured loan is. We have also listed down some examples of secured loans to help you better understand how they work.

Secured loans are one with low-interest rates since the borrower has to put up an asset or property as collateral. This collateral reduces the level of risk for the lender and makes the loan secured for parties involved. Read below to check out some examples of secured loans:

  1. Mortgage
  2. Real Estate
  3. Vehicles
  4. Insurance policies
  5. Investments
  6.  Valuables and collectives
  7. Equipment and machinery
  8. Cash Accounts

Coming back to the topic in question, a share secured loan also an example of secured loan and it is one where your savings come to help you. Check out a detailed definition of what a share secured loan is down below.

What Is A Share Secured Loan?

A share secured loan is the easiest way to get a loan without putting up your assets like property or vehicles on the line. With the help of a share secured loan, a borrower will be able to get a loan from a bank or lender, and all they would have to do is put up their savings as collateral.

This is a well-liked loan by lots of people due to a bunch of reasons. The very major reason is that you will be getting a loan and paying some amount every month for the installments, you will still have your savings secured away even though they are kept as collateral.

In simple words, you will be able to borrow a certain amount from the bank while putting up your savings to secure the loan.

This is a great way to keep your savings in place as a backup plan or safety net for the future while also fulfilling your needs right now by getting a loan against it.

How Do Share Secured Loans Work?

The dynamics of how a share secured loans are pretty easy. It is opposite to how unsecured loans work. Similar to other secured loans, for instance when you get a house on mortgage, the lease of the house will be named to the bank or the lender until the complete amount is paid off. If during that period, you default then the bank has full authority to take the possession of the house back.

Similarly, that is how a share secured loan works. Initially, the borrower would have to open up an account in a bank from whom they intend to take a loan. Then, the borrower transfers the amount they intend on borrowing. Next, the lender issues the borrower a share secured loan and freezes the account with the savings in it.

Gradually, as the borrower starts to pay off the loan amount, the bank will then start to unfreeze the amount in the bank account as well.

●     Share Secured Loan Technique

Share secured loan build credit techniques have recently come to the limelight. As the name suggests, such a technique is perfect to build a credit score. There is a share secured loan technique that people have started using to get things going in their favor.

The working of this technique is pretty easy to understand. Before we get into how the share secured loan technique works, it is important to know that paying loans consistently and on time can help in building credit scores a lot. Now, for those people who want to work on increasing their credit score they can do the following by using a share secured loans.

First of all, start putting up a small share secured loan on your credit profile. Now, since this loan will be a smaller one and one that you don’t necessarily need, you will be able to pay it back faster. Pay almost all of that loan as quickly as you can in bigger installments and leave just around 9-10% of it left.

Once you have a very small amount left to pay, you can stretch that for as long as four to five years. If you keep on making timely installments without missing any, it can help a lot in building your credit score.

●     Share Secured Loan Rates

The share secured loan rates are an added benefit to getting this loan. Since the level of risk in a share secured loan is very less, hence the rates will be affordable and cheap as well. The low level of risk makes the interest rate on share secured loans pretty low and consequently makes the loan one that is easy to obtain.

●     Benefits of Share Secured Loan

A share secured loan has tons of benefits some of which we can state down below:

  1. The low-interest rate is a huge benefit for all those people who want to get a loan.
  2. Share secured loans are easy to obtain and you don’t need to have an outstanding credit score to get it. All you need is a savings account with the same amount that you intend on borrowing and you’ll be good.
  3. While getting a share secured loan, you will also have to fulfill very minimal requirements and the process will be quick and smooth.
  4. It is a great way to work on building your credit score by the share secured loan build credit technique that we mentioned earlier.

●     Risks Of Share Secured Loan

A share secured loan can have some cons as well, let’s take a look at them:

  1. Untimely payments and inconsistency while making payments can lead to chances of credit score lessening. It is important to be consistent.
  2. It is also crucial to note that while your savings are with the bank, they will be frozen savings and you can only have access to them once you start playing the loan off. Ensure that you don’t need the savings in the future.


In the end, one should always try to gauge as much as they can about the various loans before they get one. Is secured loan a good idea? Well, the only way to check this is by looking at your savings, your need for them, and then make a decision accordingly. Take a look at the examples of secured loans to see what works best for you.

Sandra Johnson

Sandra Johnson

Sandra Johnson was a few years out of school and took a job as a life insurance agent in California, selling coverage door-to-door for Prudential. The experience taught her about the technical components of insurance and its benefits for individuals and society, as well as the misunderstandings people often have about insurance. She has over ten years’ experience in the insurance industry, having worked as both a Broker and Underwriter, assisting clients across a broad range of industries. At Insurance Noon, Sarah diligently gathers all the required information and curates up pieces to provide meaningful insurance solutions. Her personal value proposition is to demonstrate a genuine interest in always adding value for clients.Her determined approach to guiding clients has turned her into a platinum adviser to multiple insurers.