passbook loan


Personal loan secured by a savings account or a certificate of deposit (CD). These loans normally attract a lower interest rate - about two to three percent higher than the interest paid on savings or CD. Depending upon the bank, the loaned amount varies from 50 percent to 100 percent of the savings account or CD amount, with the typical being 90 percent. Passbook loans are usually issued without a credit check since the lender is under little or no risk of loss due to default. In most cases, however, banks don't report these loans to the credit bureaus and thus don't build up the borrower's credit rating.

Use passbook loan in a sentence

You may want to try and take on a passbook loan if you need to get some money quickly for a new deal.

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When my grandmother died, we learned that she had been financing her weekly trips to the casino by taking out a passbook loan secured by her savings account and then repaying it when she returned.

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Amanda had enough money her savings account that she could ask for a passbook loan and receive the loan at a lower interest rate than what her bank previously offered.

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passbook passbook savings account