What are the pros and cons of a CD loan?

 CD-secured loans might be a good idea for some, but they aren’t right for everyone. Here are some of their biggest benefits and drawbacks.

Pros of CD loans

• Easy application process: When you apply for a CD loan with a bank or credit union that holds your CD, you can often get loan approval quickly, sometimes within hours, and receive funds within a day or two.
• Continued growth: Your CD continues to earn interest throughout the life of the loan.
• Long repayment terms: Banks and credit unions usually offer generous terms, sometimes allowing you to repay funds for up to 10 years.
• Good for those with bad credit: Borrowers with poor credit often qualify for CD-secured loans.

Cons of CD loans

• Not widely available: Not all banks and credit unions offer CD-secured loans.
• Need a CD: Typically, you must already have a CD to qualify for a CD loan.
• Some fees could apply: Lenders may require an origination fee or prepayment fee for paying off the loan before the end of the term.
• Cash-out setbacks: You cannot cash out your CD until after you’ve paid off the loan