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To take out a secured personal loan, you’ll need some sort of collateral to secure the money you borrow. For example, you could use a car as collateral for an auto loan.
This also means that if you don’t repay your secured loan, you could lose your collateral.
Here’s what you should know before getting a secured personal loan:
- 8 lenders that offer secured personal loans
- What is a secured personal loan?
- Are secured loans easier to get?
- What can be used as collateral for a secured personal loan?
- What are the pros and cons of a secured personal loan?
- Alternatives to secured personal loans
- Is getting a secured loan a good idea?
8 lenders that offer secured personal loans
While most personal loan lenders offer only unsecured loans, there are some that allow borrowers to secure personal loans with collateral. Here are eight lenders that offer secured personal loans.
Keep in mind that some of the lenders in the following table are Credible partners — each of them has been marked with an asterisk.
| Lender | Fixed rates | Loan amounts | Min. credit score | Acceptable collateral |
|---|---|---|---|---|
| Avant * | 9.95% - 35.99% APR | $2,000 to $35,000** | 550 | Car |
| First Tech Federal Credit Union | Check with lender | $25,000 to $1,000,000 (depending on collateral) | Varies depending on amount and security of the loan |
|
| LightStream * | 3.99% - 19.99% APR | $5,000 to $100,000 | 660 |
|
| Navy Federal Credit Union | Check with lender | Equal to the amount of your savings or certificate of deposit | Check with lender |
|
| OneMain Financial | Check with lender | $1,500 to $25,000 | Check with lender |
|
| Oportun | Check with lender | $300 to $10,000 | Check with lender | Car |
| Upgrade * | 5.94% - 35.97% APR | $1,000 to $50,000 ($3,005 minimum in GA; $6,005 minimum in MA) | 580 | Car |
| Wells Fargo * | Check with lender | $3,000 to $250,000 (depending on collateral) | Check with lender |
|
| * Note: This lender is a Credible partner. Rates and terms may vary depending on collateral used. | ||||
What is a secured personal loan?
A secured personal loan is a type of personal loan that is secured by some type of collateral. This differs from most personal loans, which are generally unsecured.
Secured personal loans can be less risky for lenders than unsecured personal loans, as the lender can take the collateral to make up for any losses if you stop paying on the loan.
Because of the reduced risk, you might be able to get a larger loan amount or lower APR with a secured personal loan compared to an unsecured personal loan.
Check Out: How to Get a $5,000 Personal Loan
Where to get a secured personal loan
You can find secured loans through a few different places. Make sure to review all your options before taking out a secured personal loan.
- Online lenders: While there are many online lenders that offer personal loans, you’ll have to do your research to find out which ones offer secured ones. LightStream, however, does offer motorcycle and new car loans as secured loans.
- Banks: Many brick-and-mortar banks offer home and auto loans, but Wells Fargo is the only major national bank that offers a secured personal loan where you can secure a loan through your personal savings account.
- Credit unions: Your local credit union may offer a few different secured loans, including mortgages, vehicles, and some for personal reasons. Some national credit unions offer secured personal loans, like Navy Federal Credit Union, but it’s best to check with the ones in your community first.
See: Where to Get a Personal Loan
Are secured loans easier to get?
Because of the lower risk to the lender, secured loans are often easier to get than unsecured loans. If you have poor or even no credit, you might still be able to qualify for a personal loan if you can provide collateral for a loan.
Secured personal loans generally offer higher loan amounts as well, which could make it easier to access enough funds for your personal needs.
Learn More: Bank of America Personal Loans
What can I use as collateral for a secured personal loan?
You can generally use anything of value as collateral, though it will ultimately depend on the lender. Some common items used for collateral include:
- Cars
- Trucks
- Motorcycles
- RVs
- Boats
- Savings accounts
- Investments
- Life insurance
- Precious metals
- Art
- Jewelry
This might be your car, your savings, or even your house, depending on the type of secured loan you have.
Check Out: How Long It Take to Get a Personal Loan
What are the pros and cons of a secured personal loan?
While a secured personal loan might be a good idea depending on your situation, here are a few pros and cons to consider first:
| Pros | Cons |
|
|
Learn More: How to Get a $20,000 Personal Loan
Alternatives to secured personal loans
If a secured personal loan doesn’t seem right for you, there are also other options available. Here are a few alternatives to think about:
- Unsecured personal loan: If you don’t want to put any collateral at risk, an unsecured personal loan might be a better choice. Although unsecured personal loans generally have higher interest rates, you might get a longer repayment term — which could make your monthly payments more manageable. Some lenders also offer personal loans for bad credit.
- Credit card: If you only need small loans, a credit card could be a less risky option than a secured personal loan — and you’ll be able to borrow more than once. Plus, if you’re able to pay off the amount you borrowed by the due date, you won’t pay any interest. Just keep in mind that if you can’t repay your balance by that date, you might be stuck with hefty interest charges.
- Family or friend loan: You might consider asking a trusted family member or friend for a loan to help you out. However, this could put a strain on your relationship if you fail to repay the loan, so be sure to borrow wisely.
Is getting a secured loan a good idea?
A secured personal loan could be a good choice if you need a larger loan amount or are having trouble qualifying for an unsecured personal loan.
If you have poor or no credit, a secured loan could also help you rebuild or start your credit history.
Just remember that secured personal loans typically have shorter repayment times, meaning you’ll likely have higher loan payments.
If you decide to take out a personal loan — whether secured or unsecured — be sure to consider as many lenders as possible to find the right loan for your needs. Credible makes this easy — you can compare multiple lenders in two minutes.
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Dori Zinn contributed to the reporting for this article.
About Rates and Terms: Rates for personal loans provided by lenders on the Credible platform range between 4.99-35.99% APR with terms from 12 to 84 months. Rates presented include lender discounts for enrolling in autopay and loyalty programs, where applicable. Actual rates may be different from the rates advertised and/or shown and will be based on the lender’s eligibility criteria, which include factors such as credit score, loan amount, loan term, credit usage and history, and vary based on loan purpose. The lowest rates available typically require excellent credit, and for some lenders, may be reserved for specific loan purposes and/or shorter loan terms. The origination fee charged by the lenders on our platform ranges from 0% to 8%. Each lender has their own qualification criteria with respect to their autopay and loyalty discounts (e.g., some lenders require the borrower to elect autopay prior to loan funding in order to qualify for the autopay discount). All rates are determined by the lender and must be agreed upon between the borrower and the borrower’s chosen lender. For a loan of $10,000 with a three year repayment period, an interest rate of 7.99%, a $350 origination fee and an APR of 11.51%, the borrower will receive $9,650 at the time of loan funding and will make 36 monthly payments of $313.32. Assuming all on-time payments, and full performance of all terms and conditions of the loan contract and any discount programs enrolled in included in the APR/interest rate throughout the life of the loan, the borrower will pay a total of $11,279.43. As of March 12, 2019, none of the lenders on our platform require a down payment nor do they charge any prepayment penalties.
