Best Secured Personal Loans

You might choose a secured loan if you're struggling to qualify for a low rate (or qualify at all) due to bad credit or other factors. A secured loan reduces the risk for the lender but increases the risk for you — if you default on the loan, you could lose the asset you pledged as collateral.

Learn more about the advantages and disadvantages of secured loans and learn how to find the best secured personal loan for your needs.

Compare rates on secured loans

Best secured personal loans

What is a secured personal loan?

A secured personal loan is a type of installment loan backed by a valuable asset you own. You offer the asset as collateral for the loan, allowing the lender to seize the collateral if you fail to repay. Collateral reduces the risk for lenders, making them more likely to approve borrowers with bad credit or low incomes who may be deemed too risky for an unsecured loan.

Unlike mortgages and auto loans, which can only be used to purchase specific types of property that collateralize the loan, secured personal loans can be used for many of the same purposes as unsecured personal loans. You can use a secured personal loan to consolidate debt, pay medical bills, repair your car, and fund other personal expenses.

For example, you could take out a personal loan secured by the title to your vehicle and use the funds to pay for an unexpected expense. You may qualify for a lower APR (annual percentage rate) or higher borrowing limits since the loan is secured. As long as you make your payments on time, your car will remain in your possession, and the title will be returned to you (and the lien on it released) when the loan is fully paid. But if you fall behind on payments, the lender can take your car. 

Types of secured loans

Here are some examples of secured loan types. 

Secured personal loans

You can use a secured personal loan for most personal expenses. Collateral options for secured personal loans vary by lender, but it’s possible to secure the loan with an asset like your vehicle, home, or savings or investment account — even the fixtures in your home. As with other types of secured loans, the lender can seize the asset if you fall behind on your payments.

Auto loans

Auto loans are installment loans used to purchase a new or used car. The car also serves as collateral for the loan, so the lender can seize the car if you fail to make payments. 

Other vehicle loans

Boat loans, motorcycle loans, RV loans, and other vehicle loans may be secured by the asset you purchase with the loan funds. For example, if you fail to repay a secured boat loan, the lender can take your boat. 

Mortgages

Mortgage loans fund the purchase of real estate, and the property in question acts as collateral for the loan. If you default on your mortgage payments, the lender can take your home through a process called foreclosure. 

Home equity loans and HELOCs

A home equity loan, also called a second mortgage, allows you to borrow a portion of your home equity. Home equity loans come with upfront fees, and nonpayment can result in foreclosure. But, unlike a mortgage, you can use a home equity loan for almost any expense. 

A home equity line of credit, or HELOC, also lets you borrow against your home equity. Unlike an installment loan, HELOCs have draw periods (when you tap into the line of credit as needed) and repayment periods.

Business equipment loans

Business equipment loans typically use the underlying equipment as collateral. The company retains ownership of the equipment, but the lender holds a lien. 

Title loans

Title loans are often short-term, high-cost loans secured by the title to a vehicle you own outright. Unlike auto purchase loans, you can use title loan funds for almost anything. But title loans carry expensive fees, and late payments can prove even more costly. A 2025 study by the Center for Responsible Lending found that more than 40% of title loan borrowers with at least one late payment had experienced one or more of the following penalties:

• Repossession of the vehicle
• Wage garnishment
• Being sued for the debt 

Pawnshop loans

Pawnshop loans are secured by valuable personal belongings, such as jewelry or electronics. Pawnshop loans often come with expensive fees and usually provide only a fraction of the item’s value in credit. Late payment can result in losing your belongings, but pawnshop loans are otherwise non-recourse — meaning, if you don’t pay back the loan, the pawnshop simply keeps your item and doesn’t pursue you for payment. 

How does a secured loan work?

When you take out a secured loan, you give the lender permission to record a lien on the asset you offer as collateral. This lien gives the lender the right to take your asset and sell it if you miss payments. It also tells other lenders that you've already used this asset as collateral.

For example, say you borrow $5,000 and secure the loan with your car. A few years into your loan, you lose your job. You've paid down the balance to $2,000, but you can't pay any more. The lender could potentially seize your car and sell it at auction to get its $2,000 back. But even if the lender recoups what you owe, you would lose the asset, and your credit score would take a hit.

Related: How Do Personal Loans Work?

Repossession

If a lender seizes your asset to sell, you could still be on the hook for additional payment. Continuing the example above, let's say the car sells for $1,500. After late fees, additional interest, and auction fees, you owe the lender $2,400, not $2,000. Since it only recouped $1,500 of that amount, you could be billed for the remaining $900.

On the other hand, if your car sells for $4,500, the lender should send you a check for $2,100 — the difference between the sale price and what you owed.

Secured vs. unsecured personal loans

It's important to understand the differences between secured vs. unsecured loans when you're shopping around. A secured personal loan requires you to pledge an asset, like a savings account or vehicle, that the lender can take if you don't repay the loan. An unsecured loan doesn't. As a result, you could get a lower rate or a higher loan amount with a secured loan. But because there's an asset involved, they can take longer to approve and fund. Also, not all lenders offering personal loans offer secured personal loans. 

You may want to apply for a secured loan if you were approved for an unsecured loan, but the amount was too low or the APR was too high. A secured loan can also be a good choice when you can't qualify for an unsecured loan.

Where can I get a secured loan?

Check out banks, credit unions, and online lenders. Be sure to shop around, because offers and eligibility requirements vary. 

Terms often range between two to seven years; interest rates could be as low as 2.25% (depending on the asset you're securing the loan with) or above 30%, depending on the lender. Origination fees can range from 0% to 15%, depending on the lender, your loan amount, and credit profile.

What can I use as collateral for a secured loan?

While each lender has its own requirements, you can theoretically use any valuable asset as collateral for a secured loan. Common options include:

• Car
• Boat, RV, motorcycle, or other vehicle
• Home or home fixtures
• Savings account
• Stocks or brokerage account
• Certificate of deposit
• Cryptocurrency
• Fine art
• Fine jewelry or diamonds
• Rare collectibles
• Precious metals
• Life insurance policy
• Business inventory or outstanding invoices

Make sure to read your secured loan agreement carefully so you understand when and how the lender can seize your collateral, which other consequences you may face for nonpayment, and any restrictions on your use of the asset while the loan is outstanding.

Pros and cons of secured personal loans

Is a secured loan a good idea? Compare the pros and cons, then decide for yourself.

Pros

• Chance for lower rates: Collateral means less risk for the lender and could mean a lower interest rate for you.
• Could mean larger loans: The more valuable your collateral, the more you may be able to borrow.
• Opportunity to build credit: Timely payments can build your credit history and score.

Cons

• Risk of loss: The lender can take your pledged assets if you don't repay your loan.
• Limits on collateral usage: If your collateral is a financial asset, you'll lose access to the portion that secures your loan. The lender will gradually release it as you make payments. If you're in the military, you can't use your vehicle as collateral.
• Few online lenders offer secured personal loans: Aside from a handful of mainstream lenders, your best bet to find a secured personal loan may be through a local credit union.

Alternatives to secured personal loans

Knowing your alternatives can help you decide whether a secured personal loan is right for you. Think about whether one of the options below would be a better fit.

• Unsecured personal loan: This allows you to avoid the risk of pledging collateral, though you may need a good or better credit score (a FICO score of 670 or higher), and your rate may be higher than on a secured loan (even with good credit).
• Credit card: With a credit card, you can borrow as needed instead of taking a lump sum. Repayment is open-ended, offering more flexibility but potentially costing much more in interest. Secured credit cards are also available. These often require that you pledge a savings account or security deposit at the same bank as collateral.
• Use a co-borrower or a cosigner: A cosigner or a co-borrower with strong credit could enable you to borrow more, get a lower rate, or avoid pledging collateral. A cosigner does not have access to the funds and is only pursued for payments if you miss them. A co-borrower, which is a much more common option, shares access to the loan proceeds and makes loan payments jointly with you.
• Sell something: You could raise money while de-cluttering your home of unwanted possessions.
• Family loan: Borrowing from family has its perks. You can often get more flexible loan terms, a lower rate, and/or a longer repayment term, which keeps monthly payments low. Plus, money stays in the family. But it's important to take care when drawing up a loan agreement among family or friends — in order to protect valuable relationships and avoid potential tax consequences. 
• Pay cash: Create a savings plan and budget if your goal is a nonessential purchase, or not immediate. Put money away as you can with a specific goal in mind.

Methodology

Credible evaluated 32 lenders across 1,216 data points to find the best secured personal loans. We chose the best lenders based on the following weighted categories:

• Rates and fees: 18.75%
• Eligibility and options for bad and no credit: 17.5%
• Availability: 12.5%
• Loan amounts and terms: 10%
• Customer satisfaction: 10%
• Customer service: 10%
• Efficiency and fund delivery: 10%
• Discounts: 7.5%
• Credible proprietary data: 3.75%

Credible’s team of experts gathered information from each lender’s website and from our partners directly. We also considered each of our partner lenders’ statistics over a 12-month period — including average funding times, average credit scores for approved applicants, and average rates. Each data point is verified by a senior editor to make sure it’s accurate at the time of publication. 

Learn more about how Credible rates lenders by exploring our personal loans lender rating methodology.