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9 Secured Loans From Banks, Online Lenders and Credit Unions
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Secured personal loans let you borrow money against an asset you own, such as a car, or funds in your savings account. When you take out a secured loan, you’ll receive a lump sum of cash which you’ll repay in equal monthly installments. But if you can’t repay the loan, you risk losing the asset you put up as collateral.
Finding a personal loan with collateral can be difficult, since they’re not offered by all financial institutions. See a list of lending platforms and lenders that offer secured loans below.
What is a secured personal loan?
Personal loans are lump-sum loans that are repaid in equal monthly installments with fixed APRs over a set period of time, typically a few years. While personal loans are typically unsecured, meaning they don’t require collateral, secured personal loans are an option.
Secured personal loans require the borrower to put down an asset as collateral, such as a vehicle or savings account, to back the loan. If the loan is not repaid, the lender may choose to seize the collateral in order to recover the money they lost. Borrowers with subprime credit may find it easier to qualify for a secured loan, because they assume more of the risk since their asset is on the line.
| Consistent repayment schedule. APRs and monthly payments are fixed.
Better terms. You may qualify for a loan with a lower APR by putting up collateral.
Expanded qualification. It is easier for borrowers with less-than-stellar credit to get a secured loan than an unsecured loan.
| Inherent risk. You may lose your collateral if you fail to repay the loan.
Fees and penalties. A loan origination fee is typically 1%-8% of the cost of the loan.
Not available everywhere. Not all lenders offer secured personal loans, and collateral requirements vary.
If you think a secured personal loan is right for you, make sure to shop around for the best possible loan for your financial situation. Many lending platforms offer prequalification, which lets you see your potential terms and eligibility without affecting your credit score. You may be able to compare estimated personal loan APRs from multiple lenders on LendingTree’s personal loan marketplace.
Option 1: Secured personal loans with a car as collateral
If you need cash but don’t have the credit score necessary to qualify for an unsecured form of financing — or you’re seeking better terms — you could potentially tap the equity you have in your vehicle. Using your car as collateral for a personal loan may help you meet the eligibility requirements or qualify for a lower interest rate.
You may be able to use your car as collateral if:
You own the car outright and are not making payments on a lease or auto loan.
The car is registered to you.
The car has a clean title.
The car is insured.
There might also be restrictions on the vehicle’s make, model, age and mileage.
The biggest drawback to this type of loan is that your car can be repossessed if you don’t repay the loan, leaving you without essential transportation. It’s important to estimate your monthly payments and make sure a secured loan fits into your budget before you sign the dotted line.
Option 2: CD-secured loans and savings account loans
Some banks and lenders let you borrow money using your savings account or certificates of deposit (CDs) as collateral. You can typically borrow up to the amount of money you have invested in the bank, and the loan is issued at a low interest rate.
Loans that are secured by a savings account are sometimes known as credit builder loans, as they can help borrowers with bad credit to improve their credit score. However, these loans are not a good choice for borrowers who just need money to cover an emergency expense. After all, if you already have money in your savings account, you can just use those funds to cover the expense rather than taking out an interest-bearing loan.
On the other hand, borrowing a loan that’s secured against your CD may make sense if you need fast access to cash you’ve invested. Dipping into your CD before the term expires can incur an early withdrawal penalty, but CD-secured loans let you access the money that’s tied up in the CD without being penalized.
Option 3: Credit union secured loans
|Secured loans from a credit union|
|APR||As low as 5.00%||As low as 3.00%||As low as 3.50%|
|Loan amount||Up to $3,000||$500 – $500||$500 and up|
|Collateral||DCU savings account||First Tech CD or savings account||MCU CD or share account|
Lastly, you should check with your local credit union to see if they have secured loans for bad credit. Credit unions are nonprofit and member-owned, so they may be able to extend their offerings to members with a less established credit history.
Many credit unions, such as the national ones listed above, offer savings account loans and CD-secured loans. You may also be able to use an asset such as your vehicle as collateral, depending on what’s offered at your local branch. It’s always worthwhile to get in touch with your credit union when seeking a loan product. Just be sure to do your research and compare potential loan offers across multiple lenders before making a decision.