Best secured personal loans

Written by: Jennifer Brozic
• Edited by: Brad Hanson
• Updated •10 min read
This date may not reflect recent changes in individual terms.
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Secured personal loans may provide the cash you need for almost any purpose, including paying for unexpected expenses, home repairs and more.

Secured personal loans are backed by collateral, such as a savings account, certificate of deposit or vehicle. They’re often easier to qualify for than unsecured personal loans because the lender has the right to keep your collateral if you’re unable to make your payments.

Good for small loans: Regions Bank

Why a Regions Bank personal loan stands out: Some personal loan lenders have minimum loan amounts of $1,000 or more. Regions Bank offers secured personal loans as small as $250, which should help you not have to borrow more than you need. But you’ll likely need solid credit to qualify.

Pros

  • No origination fees
  • Fixed monthly payments
  • Rate discounts for autopay for certain amounts

Cons

  • Not available in most states
  • Must use a Regions savings account, CD or money market account as collateral

Read reviews of Regions Bank personal loans to learn more.

Good for credit union secured personal loans: First Tech Federal Credit Union

Why a First Tech Federal Credit Union personal loan stands out: You’ll need to be a member to get a loan from First Tech Federal Credit Union, but joining is relatively simple. If you’re a member or decide to become one, First Tech Federal Credit Union offers competitive rates and potential same-day approvals.

Pros

  • No prepayment penalties, application fees or origination fees
  • Secured and unsecured personal loans
  • Good range of loan amounts

Cons

  • Membership required
  • No APR discount for enrolling in autopay

Read our full review of First Tech Credit Union personal loans to learn more.

Good for bad credit: OneMain Financial

Why a OneMain Financial personal loan stands out: OneMain Financial offers secured personal loans ranging from $1,500 to $20,000 and may be willing to work with you if you have less-than-perfect credit.

Pros

  • Offers unsecured and secured personal loans
  • Small loan amounts available
  • Co-applicants accepted
  • Offers prequalification

Cons

  • Charges an origination fee
  • Larger loan amounts require lien on automobile
  • Higher rates than some other lenders

Read reviews of OneMain Financial personal loans to learn more.

Good for online lending: Upgrade

Why an Upgrade personal loan stands out: If you like the convenience of a digital process, you can apply for a secured personal loan online with Upgrade. Upgrade offers personal loans from $1,000 to $50,000, and you can apply for prequalification to see estimated terms without hurting your credit.

Pros

  • Good range of loan amounts
  • No prepayment fees for early payoff
  • May receive fast funding

Cons

  • Charges an origination fee
  • Late payment fee

See reviews of Upgrade personal loans to learn more.

Good for homeowners: Best Egg

Why a Best Egg personal loan stands out: Best Egg offers a unique feature for secured loans: borrowers can secure a loan using their home’s fixtures as collateral. Unlike a traditional home equity loan that uses the entire house, this loan allows you to leverage specific permanent fixtures such as built-in cabinets, bathroom vanities or lighting.

Pros

  • Prequalification to check rate estimates
  • Considers more than your credit score
  • No prepayment penalty

Cons

  • Charges an origination fee
  • Doesn’t offer co-applicants for loans

Read reviews of Best Egg personal loans to learn more.

Good for checking if you prequalify: Oportun

Why an Oportun personal loan stands out: Oportun offers a prequalification application that allows you to see if you might qualify for a loan and determine your potential borrowing amount with a soft credit inquiry. This type of inquiry won’t affect your credit scores. But if you choose to move forward with the loan application, Oportun will conduct a hard credit inquiry, which may lower your credit scores by a few points.

Pros

  • Possible quick loan funding
  • May qualify for a loan with limited credit history
  • Co-signers may be allowed

Cons

  • High maximum interest rates
  • Administrative fees of up to 10% of principle amount
  • A lien on your vehicle is needed for larger loan amounts

Read reviews of Oportun personal loans to learn more.

What is a secured personal loan?

A secured personal loan requires the borrower to put up collateral — something valuable that the lender can take if the loan isn’t repaid. Collateral can include items like a car, home or savings account.

Because collateral reduces the lender’s risk, these loans typically come with lower interest rates and higher borrowing limits than unsecured loans.

When you take out a secured personal loan, you risk losing the assets you pledged as collateral. If you don’t repay the loan, you could end up losing your vehicle, home, money or other property that’s guaranteeing the loan.

The process of seizing collateral varies depending on the type of collateral and your state laws. Your loan contract should outline when lenders can take the collateral and what they must do to seize your assets. In some cases, they can take the property serving as collateral without providing advance notice — so it’s important to read your loan agreement carefully to understand your  rights.

When a lender seizes property for nonpayment, it will likely sell it and use the proceeds to pay off your debt and cover any costs associated with recouping its losses.

You’ll only get money from that sale after the lender has been paid in full. If the sale doesn’t generate enough to repay what you owe, the lender might try to collect the difference from you.

How do secured personal loans work?

When you apply for a secured personal loan, the lender will assess the value of your collateral to determine how much it can lend you and at what interest rate. Generally, the more valuable your collateral, the larger the loan amount and the lower the interest rate you might get. When you take out a secured loan, you agree to give the lender the right to take the property that’s securing the loan if you fail to repay it as agreed. 

Where can you get a secured personal loan?

Secured personal loans can be obtained from banks, credit unions and online lenders. To apply for a secured personal loan, shop around and compare interest charges, collateral requirements and repayment terms.

If you’re looking into a car title loan or a pawn shop loan, consider other options first. These loans can be very costly, with lenders usually charging high interest and a host of fees.

Other examples of secured loans are car loans and mortgage loans — they’re backed by the property you purchase.

Types of secured personal loans

There are a few types of secured personal loans you might see when looking at lenders.

  • Auto-secured loan — This loan is secured by an eligible vehicle.
  • Savings-secured loan — This type of loan uses a savings account as collateral.
  • Stock-secured loan — This loan allows you to own your stock while being able to use the value of the stock accounts. This loan may not be as widely offered.

When is a secured personal loan a good idea?

A secured personal loan can be a good option in certain situations. For example, you might think about getting one if you can’t qualify for an unsecured loan or if the interest rate is lower than what you’d get with an unsecured loan.

As long as you can make your monthly payments on time, secured personal loans can be helpful.  They can also help you increase your credit score over time if you repay the loan as agreed.

But be careful. Some lenders target people with poor credit, offering secured loans that are very expensive. For example, car title loans can have monthly fees and interest rates as high as 25%, which means an APR of around 300%. So it’s important to research your loan terms and lender carefully and stick with reputable lenders.

Make sure you’re confident you can repay the loan. If you can’t, you risk losing your collateral and damaging your credit.

How to get a secured personal loan

If you’ve decided to borrow using a secured personal loan, you’ll want to compare loan terms and loan offers among different lenders. There are several things to consider when shopping around.

  • The interest rate — How much will you pay for the privilege of borrowing money? Some secured loans, such as car title loans, are targeted to borrowers with bad or little credit and no other options. These loans can be very expensive. On the other hand, some secured loans, such as home equity loans, may have lower rates than other types of loans.
  • The loan term — How long do you have to repay the loan? A shorter repayment period means higher monthly payments, but you’ll pay less interest over time because your debt will be paid back more quickly.
  • Fees associated with the loan — You may need to pay an application fee, a loan origination fee, monthly fees and the costs of an appraisal to determine the value of your property. Car title loans, in particular, tend to have very high fees, which is part of what makes them a bad option for many borrowers.
  • The monthly payment — Make sure you don’t take out a secured loan that isn’t affordable on a monthly basis. Not meeting your monthly payments could mean you’ll lose the collateral.
  • The collateral requirements — What property do you own that the lender will accept as collateral? Some lenders only accept a paid-off vehicle, while others could be willing to accept a savings account.
  • The time it takes to obtain the money — In certain circumstances, it may be faster to obtain a secured loan than an unsecured loan.
  • The amount you can borrow — Find out the loan minimum and maximums.

Once you’ve found a lender offering a loan you think you can qualify for with reasonable terms, you can submit an application. Make sure to check what documentation your lender may require for the loan and the collateral — each lender may have different requirements. If your application is approved, you’ll receive the borrowed funds and begin loan repayment.

Alternatives to a secured personal loan

  • Unsecured loans: An unsecured personal loan doesn’t require you to offer any valuable items, like a car or house, as collateral.
  • Home equity loan or HELOC: A home equity loan is a type of installment loan where the lender gives you a lump sum that you pay back in monthly installments until the loan is paid off. A home equity line of credit, or HELOC, is a type of revolving credit where the lender gives you a credit limit to draw from, and you’ll pay back the amount you use plus interest. Keep in mind that using your home equity to borrow money is a serious decision. If you miss payments and default on the loan, you could risk losing your home.
  • Negotiate with the creditor: If you’re struggling paying medical bills, consider talking to your healthcare provider. You might be able to set up a payment plan, negotiate the amount you owe or qualify for a financial assistance program. Similarly, if you’re behind on credit card payments, you can try to negotiate with your credit card company to manage your debt.

  • Payday alternative loans (PALs): Payday alternative loans are short-term, small loans offered by some federal credit unions. They usually have much lower fees and interest rates (APRs) compared to traditional payday loans. However, you need to be a member of the credit union for at least a month before you can apply for a traditional PAL.

Our methodology: How we pick the best personal loans

Credit Karma’s editors evaluate the best personal loans by reviewing key features of dozens of popular lenders. Those features fall into three important categories:

  • Affordability: We start by checking if a lender’s rates are competitive: are they higher than average or are they lower than many competitors? From there, we analyze if fees — particularly an origination fee — may make your loan more unaffordable. Last, we’ll check if the lender offers rate discounts for items such as automatic payments that may reduce your rate.
  • Customer-friendly features: Taking out a personal loan is a big financial commitment, so we prioritize lenders that make things easier for you. For instance, do they offer a wide range of loan amounts for people with different borrowing needs? Do they offer at least several loan terms to give you more flexibility with your monthly payment? And, crucially, can they fund your loan quickly? A lender will also get bonus points for offering direct payments for debt consolidation or other customer-friendly features.
  • Transparency: We believe personal loan terms should be easy to find and decipher. Prequalification, which lets you check what rate you may qualify for without a hard credit inquiry, is particularly important. We also check to see if a lender has been recently penalized by regulators.

Calculate personal loan costs

To better understand the total cost of any personal loans you’re considering, use an online calculator like Credit Karma’s simple loan calculator. A loan calculator can help you estimate your monthly payment and how much you’d pay in interest versus principal over the length of the loan.

FAQs about secured personal loans

Is it more difficult to get a secured loan?

Secured loans can be easier to qualify for because the lender can take the collateral if you default on your loan. Secured loans also often come with lower interest rates because of that.

What are some examples of secured loans?

Some examples of secured loans are auto-secured loans, deposit-secured loans or stock-secured loans.

What credit score do I need for a secured personal loan?

Like most loans, the higher your credit score, the better the rates and terms on your loan. But secured loans can be easier to qualify for with bad credit. Make sure to shop around to see what rates and terms you may be able to qualify for.

*Approval Odds are not a guarantee of approval. Credit Karma determines Approval Odds by comparing your credit profile to other Credit Karma members who were approved for the personal loan, or whether you meet certain criteria determined by the lender. Of course, there’s no such thing as a sure thing, but knowing your Approval Odds may help you narrow down your choices. For example, you may not be approved because you don’t meet the lender’s “ability to pay standard” after they verify your income and employment; or, you already have the maximum number of accounts with that specific lender.

About the author: Jennifer Brozic is a freelance financial services writer with a bachelor’s degree in journalism from the University of Maryland and a master’s degree in communication management from Towson University. She’s committed… Read more.