A pledge loan differs from a standard loan in that the loaned amount is completely backed with collateral from the borrower. A borrower can use their funds, such as a savings account, as collateral to obtain a loan. The funds used as collateral then become "frozen" until the loan is paid back in full. Because pledge loans are fully backed with collateral, they are easier to obtain than traditional loans and offer a number of other benefits to borrowers such as:
- Better interest rates than standard loans
- No credit check required
- Helps establish or rebuild credit history easily
- Flexible terms
A pledge loan from Fort Bragg Federal Credit Union offers additional benefits:
- Low loan amounts starting at $300
- You continue to earn dividends on your "frozen" funds