Loans Against Cash Value

[Dan68701]

Hi, I'm looking for a bank that will accept my high cash value policy as a collateral for a loan. I know I can borrow directly from the policy, but the interest is higher than I'd like to pay. My understanding is that there are banks out there that will lend against policies with rates as low as 2.5%. Any idea which banks will do that?

 

[glgamerica]

Former loan officer here.

I doubt you'll find a bank to do that. Banks just prefer you get a credit card. You might check with a credit union, if you are a member of one but even then I doubt they would do that.

If anything, a bank or credit union will maybe loan you money against a Certificate of Deposit you have with them.

To many hoops to jump through to secure your loan with the cash value of your life insurance.

 

[scagnt83]

There are actually a few banks that specialize in this and do it on a regular basis. I forget which ones they are but try doing a search here on the form because this has been discussed before. I think it's usually a Line of Credit and not a loan.

And if I went to my personal bank for a secured line of credit and they suggested a credit card... I would probably stop doing business with that bank.

 

[glgamerica]

There are actually a few banks that specialize in this and do it on a regular basis. I forget which ones they are but try doing a search here on the form because this has been discussed before. I think it's usually a Line of Credit and not a loan.

And if I went to my personal bank for a secured line of credit and they suggested a credit card... I would probably stop doing business with that bank.

I can only tell you that in my 8 years as a loan officer in a community bank, we never made any loans tied to the cash value. We did make loans from time to time on CD's on deposit at our bank.

Banks are interested in secure loans, but mainly on mortgages and auto dealer paper.

If you were a business, we made commercial loans on equipment, etc. Life insurance was mainly used in structuring loans in the event of the death of the insured.

But otherwise for the consumer, banks have really gotten out of that type of personal loan lending. If you can't qualify for a credit card, the security of an auto title or the cash value of life insurance policy won't matter.

They'll just tell you to go down the street to the other bank who won't do it either.

Credit unions might be more flexible (as well as smaller banks).

I'm mainly talking about small personal loans here as well.

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I did find this thread that mentioned a couple of banks here on the forums.

I can't link to the post because I am a fairly new member.

Two banks someone mentioned were:

Valley National and Investors Savings

 

[Dan68701]

I'm familiar with those two banks. I was looking for an even cheaper option.

 

[scagnt83]

I can only tell you that in my 8 years as a loan officer in a community bank, we never made any loans tied to the cash value. We did make loans from time to time on CD's on deposit at our bank.

Banks are interested in secure loans, but mainly on mortgages and auto dealer paper.

If you were a business, we made commercial loans on equipment, etc. Life insurance was mainly used in structuring loans in the event of the death of the insured.

But otherwise for the consumer, banks have really gotten out of that type of personal loan lending. If you can't qualify for a credit card, the security of an auto title or the cash value of life insurance policy won't matter.

They'll just tell you to go down the street to the other bank who won't do it either.

Credit unions might be more flexible (as well as smaller banks).

I'm mainly talking about small personal loans here as well.

----------

I did find this thread that mentioned a couple of banks here on the forums.

I can't link to the post because I am a fairly new member.

Two banks someone mentioned were:

Valley National and Investors Savings

You are talking about a totally different demographic of lending. We aren't talking about $5k or $10k loans here. And most people with these policies are more than capable of qualifying for the majority of credit cards out there. They want a collateralized loan because they are very well qualified and it would/should come with an extremely low interest rate. Most WL based 3rd party moans are going to be in the 2%-3% range from what I've seen/heard.

This isn't a desperation loan, this is a loan to a well off person to finance something major.

You are correct that the average community bank does not specialize in this. But it exists. It also doesn't mean that you couldn't find a local bank that would work with you.

 

[Dan68701]

Precisely. I'm talking about a $1mm+ loan. Valley National and Investors bank have a product for this, but the rate is close to 4%. My understanding is that there are banks that will do this in the 2-3% range. I'm looking for help in someone identifying which lenders I should be looking to.

Any guidance would be appreciated.

 

[scagnt83]

Precisely. I'm talking about a $1mm+ loan. Valley National and Investors bank have a product for this, but the rate is close to 4%. My understanding is that there are banks that will do this in the 2-3% range. I'm looking for help in someone identifying which lenders I should be looking to.

Any guidance would be appreciated.

I dont have any recommendations other than those two. I do specialize in WL and UL... but not in 3rd party financing of Loans. Maybe someone else will come along and help out on here once the workweek starts.

 

[Dan68701]

Hopefully - thanks for trying though. Much appreciated!

 

[DHK]

This *may* be an option that you're looking for, but I have no idea what their rates are. I know they are generally tied to LIBOR and have many ways to customize the rates.

Global Financial Distributors works with other agents for creative premium financing options for advanced needs.

https://www.globalfd.com/policy-loan-refinancecsv-lending

LOANS AGAINST POLICY CASH VALUE

GFD is able to provide loans of up to 100% of the minimum guaranteed cash surrender value of your existing universal or whole life policy (CSV).

Additional benefits of GFD’s in-force lending options include:

Personal guarantees are generally not required for business borrowers
10 year loan term with no annual “re-underwriting”
Highly competitive rates
Rapid underwriting and loan approval
Broad range of carriers accepted
Please contact us for more information about these loans at 800-515-2599. If you would like us to contact you, click here to fill out our contact form and a Financial Services Manager will get back to you.

This may be another avenue worth looking into.