Best Secured Loans in 2024

Secured loans require collateral, have more lenient requirements and could be a good fit for bad credit borrowers.

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Best secured personal loans in 2024

Written by Tara Mastroeni and Carol Pope | Edited by Amanda Push | Updated April 30, 2024

First Technology Federal Credit Union: Best large secured loans

Starting at 3.00% + certificate account rate

$500 - $500,000

Up to certificate maturity

None

Share certificate account

Pros

  • Offers extra-large loans to those with extra-large share certificate accounts
  • Share certificate continues to earn dividends as you pay your loan
  • Highly-rated mobile app

Cons

  • Must have First Tech certificate account
  • Must meet membership eligibility requirements
  • Physical locations only in California, Oregon and Washington

What to know

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First Technology Federal Credit Union’s Certificate Secured Loan can be a good way to invest and borrow at the same time. As you pay back your loan, the funds in your certificate account will continue to earn dividends. Although the same is true for a savings-secured loan, certificate accounts generally earn more interest.

What’s more, depending on your credit profile and how much you have in your certificate account, you could borrow up to $500,000.

How to qualify

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Like other credit unions, you must join First Tech before you can open an account. If you work for a partnering employer, have a family member who is currently a member or live in Lane County, Ore., you can join.

If you don’t meet these requirements, you’ll have to sign up for the Computer History Museum or Financial Fitness Association. However, First Tech will pay for your first year of membership, and you’re not required to maintain membership to keep your First Tech account.

After you join First Tech, you’ll need to have a certificate account to take out a Certificate Secured Loan. These require a minimum opening balance of $500. You may also need to meet the credit union’s credit requirements, which are undisclosed.

Digital Federal Credit Union: Best secured loan with flexible term lengths

Starting at 3.50%

Up to your savings account balance

Up to 120 months

None

Savings account

Pros

  • Skip-A-Payment program available in case of financial hardship
  • Live chat support available
  • 120-month loan term

Cons

  • Must have DCU savings account
  • Physical branches only in MA and NH
  • Fee required to join a participating organization if you don’t meet other membership requirements

What to know

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Digital Federal Credit Union (DCU) offers a few secured loans. Notably, its Savings-Secured Loan offers one of the longest loan terms on the market — 120 months.

With this loan, you’ll borrow against your DCU savings account, with a fixed APR starting at 3.50%. Borrowers with lower credit scores could be eligible, since DCU states that repaying a Savings-Secured Loan on time could improve your credit.

How to qualify

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As a credit union, you must be a DCU member to take out a loan. However, DCU membership is open to those in all 50 states.

If you don’t live, work, worship or go to school in certain communities in Massachusetts or work for a participating employer, you’ll need to join one of DCU’s participating organizations. Although all these organizations charge a membership fee, they are open to anyone.

Also, you’ll need to open and fund a DCU savings account, since this is what you’ll be borrowing against. Finally, DCU will likely review your borrowing history to determine eligibility, although it doesn’t disclose its credit-related criteria.

Regions: Best small secured loans

Starting at 4.00%

Starting at $250, minus fees

Varies based on loan amount

None

Savings account

Pros

  • Low minimum loan amount
  • No origination fee
  • Interest rate discount may be available for automatic payments and those with an existing relationship with the bank

Cons

  • Only available in 16 states
  • Higher APR than some
  • Charges late payment fee

What to know

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If you live in a state where Regions Bank does business and are looking to build credit, this bank’s Deposit Secured Loan might be worth exploring. As long as you have at least $250 to deposit into your savings account, you could take a secured loan against it.

And thanks to its minimum loan amount, this product could be a great fit if you already have a Regions savings account and need a small loan.

How to qualify

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To determine your eligibility, Regions will review your overall credit history as well as your income. Regions is only available to residents of Alabama, Arkansas, Florida, Georgia, Iowa, Illinois, Indiana, Kentucky, Louisiana, Missouri, Mississippi, North Carolina, South Carolina, Tennessee, Texas and Utah.

Best Egg: Best secured loan for homeowners

(2,571)
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5.99% to 29.99%

$2,000 - $50,000

36 to 84 months

0.99% - 9.99%

Home fixtures

Pros

  • Does not use home itself as collateral
  • Extended loan term available
  • Competitive APRs for excellent-credit borrowers

Cons

  • Requires an origination fee
  • Must be a homeowner
  • May default if you sell your home before loan is repaid

What to know

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Best Egg’s Secured Loan + Homeowner Discount is a unique loan that uses your home’s fixtures as collateral. Eligible fixtures could include bathroom vanities, built-in cabinetry and other elements permanently attached to your home.

Like any secured loan, this product comes with some risk. Best Egg will place a lien on your fixtures while your loan is open. If you sell your home before paying off your loan, you could default. If this happens, your entire loan balance could be due immediately. Best Egg may also repossess your home’s fixtures from the new owner.

Still, this loan may be worth it. Best Egg states that borrowers may save an average of 20% on their APR by using collateral (as opposed to getting an unsecured loan). Just be sure that you understand how this product works before signing on the dotted line.

To learn more, read our full Best Egg personal loan review.

How to qualify

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Although Best Egg uses your home’s permanent fixtures as collateral, it doesn’t need to appraise those fixtures’ value. Instead, Best Egg will review your credit history and home equity to ensure you qualify.

You must also be a U.S. citizen or permanent resident living in the U.S., the age of majority in your state and have a personal checking account, email address and physical address to apply.

Best Egg loans aren’t available in the District of Columbia, Iowa, Vermont, West Virginia or U.S. Territories.

Upgrade: Best secured loans for bad credit

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8.49% - 35.99%

$1,000 - $50,000

24 to 84 months

1.85% - 9.99%

Car less than 20 years old

Pros

  • Low minimum credit score requirement
  • Offers flexible terms of 24 to 84 months
  • Don’t need to tie up money in a certificate or savings account

Cons

  • Potential for high origination fee
  • Not all cars qualify as collateral
  • High maximum APR

What to know

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At just 580, Upgrade’s minimum credit score requirement is lower than many lenders. And using your car as collateral for Upgrade’s Auto Secured Loan could further boost your personal loan approval odds.

It’s important to note, however, that those who do have bad credit could pay an APR as high as 35.99%. You may want to choose Upgrade’s minimum loan term to pay less interest over the life of your loan (although higher terms are also available).

Read our full Upgrade personal loan review.

How to qualify

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To get an Auto Secured Loan through Upgrade, your car must meet some eligibility requirements. First, it must be less than 20 years old. You must also have insurance and own it outright. It has to be registered in the state that you live in and it cannot have a salvage title. Only personal vehicles are eligible.

Upgrade will also evaluate your overall creditworthiness by reviewing your credit score, debt-to-income ratio and payment history. Applicants need to be U.S. citizens, permanent residents or living in the U.S. with a valid visa. Lastly, you must be of legal age, have a bank account and email address.

What is a secured loan?

Secured loans are debts that are backed by a valuable asset, also known as collateral. This asset can take the form of a savings account or property, like cars or houses.

Collateral can make it easier for those with bad credit to take out debt and access lower rates.

This is because secured loans, also known as collateral loans, and the collateral you provide for a secured loan offsets some of the risk lenders take on when lending you money. If you’re unable to repay the debt, your lender can seize your collateral to recoup their financial losses.

As a result, your bank, credit union or online loan lender may have requirements around what type of collateral you can use. Some lenders may only accept a savings account or certificates of deposit (CDs). Others may require your vehicle and have specifications around that as well, such as age and mileage.

Secured vs. unsecured loans

When comparing secured versus unsecured loans, there are a few key differences to keep in mind.

Generally, secured loans are easier to qualify for than unsecured loans. Plus, they often come with lower annual percentage rates (APRs) and higher loan amounts.

With a secured loan, putting collateral on the line reduces some of the lender’s risk because it allows it to repossess your asset if you default on your loan. In other words, it allows the lender to recoup something of value if you can’t keep up with your loan payments.

For their part, unsecured loans don’t have the same risk of repossession. However, since the lender takes on more risk, these loans are often more difficult to qualify for than secured loans. They also typically come with lower loan amounts and higher interest rates.

How secured loans work

At their core, secured loans work similarly to any other type of installment loan.

  • The first step is making sure you meet the lender’s eligibility requirements. Here, the lender will likely want to assess the value of the asset that you’re putting up as collateral in addition to looking at more standard criteria, such as your credit score and debt-to-income ratio (DTI).
  • If you qualify, you’ll be approved for the loan. Once you sign the loan agreement, the lender will place a lien on your collateral, giving it the right to repossess your collateral if you stop making payments. After all the paperwork is in place, the lender will distribute the loan funds to you.
  • Once you close on the loan, begin making regular repayments. Installment loans are typically repaid every month, with regular reporting to the credit bureaus.
  • Continue making payments until your loan has been repaid in full. Then, the lender will remove the lien from your collateral. After the lien has been removed, the lender no longer has the right to take that asset from you.

What can be used as collateral for a loan?

Just as there are different types of secured loans, there are also various types of assets you can use to secure your debt. Some of the most common forms of collateral are real estate, vehicles, savings accounts and CDs.

  • Real estate
  • Vehicles
  • Checking and savings accounts
  • CDs
  • Money market accounts
  • Stocks
  • Mutual funds
  • Bond investments
  • Insurance policies
  • Jewelry and other expensive types of valuables

Types of secured personal loans

Secured loans aren’t as common as unsecured loans, but you may find them by contacting banks, credit unions and online lenders. Each lender will have its unique collateral requirements, but here are a few common types:

  • Savings-secured loan: A savings-secured loan uses a savings account as collateral. Your maximum loan amount usually equates to the amount of money you have in your account.
  • Certificate of deposit (CD) loan: This type of loan uses an existing certificate of deposit as collateral. In this case, your CD must be matured, otherwise an early withdrawal penalty applies. However, if your CD is eligible, these accounts typically earn more interest than standard savings accounts.
  • 401(k) loan: If you have an employer-sponsored 401(k) plan, you may be able to borrow against it in the form of a 401(k) loan. This type of loan allows you to borrow against your account for up to five years. However, if you leave your job before then, you may be expected to repay the loan immediately or you’ll face an early withdrawal penalty.
  • Home equity loan or HELOC: Home equity loans and HELOCs use the equity you’ve built up in your home as collateral. These loans typically allow you to access large loan amounts at affordable interest rates. But, if you’re unable to repay the loan, the lender can seize your home.
  • Auto-secured loan: Similarly, an auto-secured loan uses your car as collateral. In this instance, you would transfer your car’s title to the lender, and the lender would send it back to you once the loan is repaid in full. However, it’s important to note that auto-secured loans are different than car title loans. (More on that below.)
 Beware: Secured loans and predatory lending

Not all secured loans are created equal. Some secured loans, especially those seeming to target bad credit borrowers, are far more likely to fall under the category of predatory lending, including:

Title loans: In exchange for a loan, you’ll give your car title to the lender. If you don’t pay your loan back, it can repossess your vehicle. Although this doesn’t sound too different from a regular auto-backed loan, title loans come with excessively high APRs and short loan terms (around 30 days).

Pawn shop loans: Under this model, you’ll give a pawn shop a valuable personal item. Jewelry, for instance. The pawn shop will give you a loan based on the value of your item (but much less than what it is appraised for). You’ll have 30 to 60 days to pay back what you borrowed, plus fees. Otherwise, the pawn shop can sell your collateral.

Secured loans pros and cons

Borrowing money through a secured loan may not be the best option for everyone. Not keeping up with your payments can tank your credit score, and to make things worse, you’ll likely lose your collateral.

ProsCons

 Attractive terms. Secured loans tend to have lower APRs than unsecured loans.

 Looser requirements. Compared to secured loans, unsecured loans are usually easier to qualify for if you have bad or fair credit.

 Predictable billing. Like on other installment loans, APRs are fixed. This means your payments will be the same each month.

 Can be risky. The lender may repossess your collateral if you fail to pay.

 Hard to find. Not all lenders offer secured loans, and you may need to join a credit union to get one.

 May come with fees. Some personal loans come with an origination fee. This is an administrative fee typically taken out of your loan amount.

How to apply for a secured personal loan

Applying for a personal loan — whether it’s secured or unsecured — typically follows a similar process.

  1. Review your finances: Before taking on debt, it’s essential to make sure the amount you’re borrowing suits your needs and that you’re able to pay it back without issue. Use our personal loan calculator to get an idea of how a secured loan may impact your budget.
  2. Carefully choose your collateral: Next, you should decide what you’re willing to put up as collateral. It’s important to choose wisely. Remember, the lender can seize your collateral if you’re unable to pay back your loan.
  3. Shop around for a loan: Contacting three to five lenders to prequalify for a personal loan can help you find an offer with the best terms and rates. Just be sure to give each lender the same information so you can make an apples-to-apples comparison once you have your loan offers in hand.
  4. Formally apply with your chosen lender: Once you’ve compared offers and chosen the loan that’s best for you, you need to submit a formal application. The lender may ask for more detailed information, such as pay stubs or bank or tax statements before making a final determination on your application.
  5. Receive your loan funds and enter repayment: If your application is approved, your lender will disburse your loan funds to you, so you can use them as needed. Soon after you’ll be responsible for making regular payments until your loan is paid off.

Tips for applying for a secured loan with bad credit

If you have a lower credit score, it’s likely a good idea to try and improve your score before applying to boost your odds of loan approval. Here are some tips to make it happen.

  • Check your credit scores and reports: Keeping tabs on your credit score can help you track where you may stand in the eyes of lenders. You can check your credit score for free using tools like LendingTree Spring. It’s also a good idea to get a copy of your credit report and verify that all the information is correct. You’re entitled to access one free copy of your reports each week from AnnualCreditReport.com.
  • Lower your DTI: Your DTI ratio measures what percentage of your monthly income goes toward paying down debts. If your DTI is above 35%, consider lowering it by increasing your income or working to pay down your debts.
  • Make future payments on time: Payment history accounts for 30% of your overall FICO score. By making future payments on time, you’ll help grow your score.
  • Assess the value of your collateral: Most secured loan lenders will use the value of your collateral to determine the amount that you can borrow. Having your collateral appraised ahead of time can help you get a better idea of how much you may qualify for in a loan.
 Secured loans and default risk

Secured loans have many benefits, but they also come with some big risks. If you are unable to keep up with your loan payments, your lender has the right to repossess the asset you’ve used as collateral. That’s why it’s important to choose your collateral carefully and make sure you’re able to comfortably budget for your payments before applying for a secured loan.

Alternatives to secured personal loans

Taking a one-size-fits-all approach to any financial product can be a surefire way to find yourself worse off. Here are some alternatives to secured loans that may better suit your needs.

  • Joint loan: A joint loan is a personal loan that you share with another person. Adding a creditworthy person to your loan application can be an effective strategy if you don’t qualify for a loan on your own. However, be aware that both of your credit scores will be impacted if you make late payments or default.
  • Secured credit card: A secured credit card works like a regular credit card, except that you’ll make a cash deposit, which will serve as your credit limit. You can borrow against it as needed, up to that deposit amount. Then, as you pay down your balance, your line of credit gets replenished.
  • Buy now, pay later (BNPL) programs: BNPL programs allow you to split up a large outstanding balance over a series of a few payments. These programs offer a few different payment structures, so be sure to read the details of your loan agreement carefully to ensure you understand how to keep up with your payments.
  • Bad-credit loans: Bad-credit loans are unsecured personal loans that are designed for borrowers with low credit scores. These loans typically come with more lenient qualifying standards than your typical unsecured loan. But, in exchange, the APRs on these loans can be high, which may cost you more money in the long run.

How we chose the best secured personal loans

We reviewed more than 10 lenders to determine the overall best five secured personal loans. To make our list, lenders must offer secured loans with competitive APRs. From there, we prioritize lenders based on the following factors:

  • Accessibility: Lenders are ranked higher if their personal loans are available to more people and require fewer conditions. This may include lower credit requirements, wider geographic availability, faster funding and easier and more transparent prequalification and application processes.
  • Rates and terms: We prioritize lenders with more competitive fixed rates, fewer fees and greater options for repayment terms, loan amounts and APR discounts.
  • Repayment experience: For starters, we consider each lender’s reputation and business practices. We also favor lenders that report to all major credit bureaus, offer reliable customer service and provide any unique perks to customers, like free wealth coaching.

Frequently asked questions

Unfortunately, there’s no one-size-fits-all answer to the question, “What credit score is needed for a loan?” Each lender will impose their unique set of eligibility requirements, so be sure to research lenders and verify that you fit their criteria before applying for a loan.

The decision of whether or not it makes sense to apply for a secured loan depends on factors such as your financial position and credit score. On one hand, these loans often feature flexible qualifying standards, larger loan amounts and more affordable rates than unsecured loans.
 
However, there is always the risk that your lender may repossess your collateral if you are unable to keep up with your loan payments. Be sure to weigh the risks and benefits carefully before agreeing to a secured loan.

Usually, but the minimum credit score needed for a secured loan is typically lower than that of an unsecured personal loan. If you have no or bad credit, you may want to look into a no-credit-check personal loan, instead. APRs on these types of loans are high, but they can come in handy when used responsibly or during a financial emergency.