How to Borrow Against Your Savings

Passbook savings loans, also known as secured personal loans and savings secured loans, present a way for you to borrow money from your own savings account. The chief advantage of this type of loan is that interest rates are far lower than credit card or unsecured loan rates, typically in the 2 percent to 10 percent range. In many cases, you can borrow up to 100 percent of your savings account balance. Passbook savings loans are an excellent way to establish or rebuild credit. Moreover, your savings balance continues to earn interest during the life of the loan.

Step 1

Contact a loan officer at your financial institution. You may be able to speak with a loan officer about passbook savings by phone or in person. Because the loan is secured by your savings account, you can usually sidestep filling out an application. At many banks, you can get approved immediately.

Step 2

Discuss loan terms and payments. You may be able to secure a term of as little as 36 months to as many as five years. Of course, the longer the term, the lower your monthly payment.

Step 3

Look over the promissory note carefully. Although you reviewed the terms with the loan officer, you want to be doubly sure that what was discussed is reflected in the loan document.

Step 4

Make your payments timely. This is especially critical if you are trying to re-establish credit.