What is a share secured loan
Share Secured Loans
AODFCU offers two types of share loans:
This loan, which can be used for any purpose, is secured by the available funds in your regular savings account. You secured funds will still earn dividends.
A share-secured loan allows you to receive a significantly reduced loan rate in return for pledging your credit union shares as collateral against the loan. AODFCU will charge you 0.50% above the current rate that you are currently earning on your share account. In order to be classified as a "share-secured" loan, 100% of the loan balance must be covered by your savings. For example, if you borrow $5000.00 - you need to pledge $5000.00 from your savings account. Your pledged amount automatically reduces with your loan balance.
The Annual Percentage Rate may increase or decrease during the term of the note. Any such change will be based on an increase or decrease in the index. The Index is the dividend rate being paid on the account offered as security, and is subject to change at the credit union's discretion. The Annual Percentage Rate is determined by adding a Margin of 0.50% to the Index as of each Change Date. The change date is the last day of the month. The maximum ANNUAL PERCENTAGE RATE that can apply is 18.00%. Increases in the Annual Percentage Rate may increase the number of scheduled payments required to pay the loan in full.
Borrow up to 90% of your Share Certificate balance
while you continue to save money. AODFCU will charge you 0.50% above what you currently are earning on your share certificate account.
The APR on Certificate Secured Advances will be the certificate rate being paid plus .50 percentage points. Certificates offered for security must be renewed until the advance is completely paid. When the certificate is renewed the APR may change to reflect a new certificate rate certificate rate. Certificate must be renewed as long as balance exists. Failure to renew the certificate will result in default. The following applies to all variable rate advances: The APR will never be greater than the rate permitted under the Federal Credit Union Act. Any increase in the APR will result in more payments of the same amount.
Great for members who need to build a good credit history:
If you're new to credit, have a limited credit history, or have had previous credit problems, a share secured or certificate loan can help you build up your credit. Payments can be automatically deducted from your account (no late payments to hurt your credit record). Each month, this loan is reported to the credit bureau as a current account in good standings -- and over time -- helps to build a stronger credit record.
A benefit for members who have:
- no credit file
- a limited credit history
- had past credit problems
Use our Loan Calculator to work out your loan.
Contact a credit union representative today for additional information.Source: www.aodfcu.com