A Secured Certificate Loan (SCLO) is a loan guaranteed by your own savings held in a fixed-term deposit account or a certificate of deposit (CD). It is one of the simplest and least expensive forms of credit.
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The concept in a nutshell
You borrow money using the balance of your certificate as collateral. Your savings continue to earn interest while you repay the loan.
Why is it a great option?
Minimal interest rates: The rate is usually calculated by adding a small margin (often 1% to 3%) to the rate your certificate earns. This is much cheaper than a traditional personal loan.
Guaranteed approval: Since the bank already holds the money, there is virtually no risk of rejection, even with a limited credit history.
Protection of savings: You avoid early withdrawal penalties on your certificate of deposit because you are not breaking your investment.
Speed: Funds are often available within 24 hours.
How does it work?
Amount: You can generally borrow up to 100% of the value of your certificate.
Term: The repayment period is aligned with the remaining maturity date of your investment.
Freezing of funds: The amount pledged as collateral is blocked. It is released gradually with each monthly payment.
Who is this for?
It’s the perfect solution for rebuilding your credit or financing an urgent need while ensuring your capital remains invested and productive.