A secured personal loan is a type of borrowing where you pledge an asset as collateral to guarantee repayment. This collateral—such as a car title, savings account, certificate of deposit (CD), or even home fixtures—reduces the lender’s risk, often leading to lower interest rates, higher loan amounts, and easier approval compared to unsecured loans. If you default on payments, the lender can seize the collateral to recover their funds.
Unlike unsecured personal loans, which rely solely on your creditworthiness and income, secured loans are ideal for borrowers with lower credit scores or those needing larger sums. However, they come with the risk of losing your asset.
Key Differences: Secured vs. Unsecured Personal Loans
| Aspect | Secured Personal Loan | Unsecured Personal Loan |
|---|---|---|
| Collateral | Required (e.g., vehicle, savings, CD) | None required |
| Interest Rates | Typically lower (starting at 3.50% as of Sep 2025) | Higher (often 10-35% or more) |
| Loan Amounts | Higher (up to $50,000+ depending on collateral value) | Lower (usually $1,000-$50,000) |
| Approval | Easier, even with bad credit (scores as low as 500) | Stricter, based on credit score and income |
| Risk to Borrower | High—risk of losing collateral | Lower—no asset at risk, but potential debt buildup |
| Repayment Terms | Longer (up to 60-180 months) | Shorter (12-60 months) |
| Best For | Building credit, large purchases, debt consolidation | Quick cash needs without assets to pledge |
Pros and Cons
Pros:
- Lower Costs: Rates can be as low as 3.50% APR, making them more affordable.
- Accessibility: Great for fair/poor credit; some lenders approve with scores around 500.
- Larger Loans: Borrow more by leveraging asset value (e.g., up to 50-100% of collateral).
- Credit Building: On-time payments boost your score; some are designed for this purpose.
Cons:
- Asset Risk: Defaulting means losing your collateral (e.g., car or savings).
- Limited Flexibility: You must own qualifying assets; not all states or lenders offer them.
- Fees and Terms: May include origination fees; rates still vary by credit and collateral type.
- Slower Funding: Approval might take longer due to asset verification.
Current Rates and Options (as of September 2025)
Rates fluctuate based on your credit, collateral, and lender. Here’s a snapshot from top providers:
- LendingTree Partners: Starting at 3.50% APR for secured loans; compare multiple offers in minutes.
- Navy Federal Credit Union: Savings-secured at ~2.25% APR (share rate +2%); certificate-secured at ~6.20% APR.
- Oportun: Car-title secured loans with fixed payments; available in select states, prequalify without credit impact.
- OneMain Financial: Accepts scores as low as 500; vehicle must be 10 years or newer for larger loans.
- KeyBank: 11.99% APR example for $20,000 over 60 months ($444.79/month); uses ATVs, CDs, or investments as collateral.
- Digital Federal Credit Union: Savings-secured for credit-building; quick but not for urgent cash.
For personalized rates, use a loan calculator or prequalify online—most won’t ding your credit.
How to Apply for a Secured Personal Loan
- Check Eligibility: Assess your assets (e.g., paid-off car, savings balance) and credit score.
- Shop Around: Compare rates from credit unions (like Navy Federal or PSECU) and online lenders (via LendingTree).
- Gather Documents: ID, income proof, asset details (e.g., vehicle title or account statements).
- Prequalify: Apply online or via app; approval can take 24 hours.
- Sign and Fund: Electronically sign; funds deposit quickly, but verify state availability.
Is a Secured Loan Right for You?
If you have assets to pledge and need affordable borrowing for debt consolidation, home projects, or big purchases, yes—especially to build credit. Avoid if you’re risk-averse about losing collateral or can qualify for an unsecured option. Consult a financial advisor, and remember: High-APR offers (e.g., 35%) signal caution—shop widely.
For specific quotes, visit lender sites like Lending tree or Navy Federal. If this isn’t what you meant, provide more details!