Cash for collateral!!!?

[strive4credit]

Can a person borrow money from a bank using money for collateral?

For example, use 25k as collateral for a loan for that amount or lesser.

If so, can that person use some or all of the money put up to secure the loan?

[30daylate]

I have heard of people using CDs as collarteral. The collateral has to be tied up somehow I think so that you can't just cash it out. Maybe tie up the money in tbills

[Driller]

I got a 25K loan from Wells Fargo using a CD that I had with them as collateral, So yes a bank will loan you money using cash as collateral. A secured credit card is a small loan with cash being used collateral.

[hare_tortoise_credit]

Using cash to secure a loan is uncommon at banks. They usually ask you to put your money in a CD, which will hold the entire amount of your deposit until the loan is paid back.

If you get a Share Secured Loan from a Credit Union, it will work mostly the same, but as you pay down your loan, the credit union will release the funds it is holding as security, dollar for dollar.

What is a share secured loan?

The use of a shared secured loan is the same as a personal loan, but it has lower interest rates. Why? Because this loan allows you to borrow against the funds in your Credit Union Share Account . These funds on deposit are used as collateral for this loan. The amount pledged in your share account is reduced dollar for dollar as the loan balance decreases."

I just made one in December. I gathered up my savings, my bill money and everything and put that amount in my credit union. (Call multiple credit unions to get a good rate, I found out my rate of 2.75% after faxing a form letter to all of the local credit unions requesting rates and making sure they report their loans to ALL THREE credit reporting agencies.)

Then I took a loan out. They put a hold on my money in the bank, but gave me the same amount of money in the loan. I put my savings back in my savings account (share account), used the bill money for bills, and now I get one more type of credit showing I pay on time, with no big deal and no hassle.

I have to pay the interest, so it's not free, but it isn't very expensive to have another creditor reporting me as an always on time payer.