: You receive the loan amount as a lump sum to use for any purpose.

A savings-secured loan (often called a or passbook loan ) is a type of credit that uses your own savings account or certificate of deposit (CD) as collateral. It is a strategic financial tool often used by those who want to build credit without depleting their hard-earned reserves. How It Works

: While the money remains in your account and continues to earn interest, it is "frozen" and cannot be withdrawn until the loan is repaid.

: As you pay back the principal, many lenders will gradually release the corresponding amount of your frozen funds. Why Use One? Savings Secured Loan - Money Federal Credit Union

When you take out a savings loan, the financial institution places a "hold" on an amount in your savings account equal to the loan amount.