Stock Secured LoanCredit Cards and LoansStock secured loan...if you have a substantial stock portfolio and need some money, you could just sell some of the stock to get the money. After all, that's one of the reasons you put it there in the first place. You wanted the security that comes with having some rainy day money set aside. But if you cash it in to solve an emergency or make a long awaited purchase there are a number of things that may make that purchase substantially more expensive than you realized. First, there are capital gains taxes to consider. Also, what about the lost opportunity cost associated with not having that investment there appreciating in value. And finally, the oh so obvious matter of simply not having your nest egg anymore! Perhaps this is merely a psychological cost, but you pay it nonetheless. A stock secured loan is one way to mitigate these potentially hidden costs of caching in your "chips" to solve a problem or buy something. By using the security of your investment to lower the loan costs associated with borrowing the money you get the best of both worlds. You can typically borrow a substantial percentage of the total value (we have seen LTV of up 85% for bank-held certificates). The interest rates on these loans are among the best anywhere and compare very well with the current car/boat/RV loan rates, and of course even better against prevailing credit card rates. Between the tax deferment savings, the better interest rates, and the protection of the opportunity for continued gains from the investment, a stock secured loan can save you a bundle compared to selling your stock. So, where do you go to get one of these loans? Well, it turns out that once again it is the credit unions to the rescue. Most of the stock secured loan programs we have found are provided by credit unions rather than other common types of lending institutions. We don't know if there is a regulatory reason for that, but the credit unions seem to have a monopoly on this type of loan.
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