May 24, 2022

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Best secured personal loans | Fox Business

Our goal here at Credible Operations, Inc., NMLS Number 1681276, referred to as “Credible” below, is to give you the tools and confidence you need to improve your finances. Although we do promote products from our partner lenders who compensate us for our services, all opinions are our own.

Secured personal loans are backed by collateral, but are they the best choice? Learn more about the benefits and drawbacks of this type of loan. (iStock)

When you apply for a secured personal loan, lenders require you to put up some sort of collateral to borrow the money, such as a car. In many cases, you may be able to score a larger loan amount or lower interest rate. But if you fail to make your payments, the lender can seize your collateral. 

Unsecured personal loans don’t require you to put up collateral to get the loan, but you typically need excellent credit to qualify for the best rates and terms. If you have poor credit, or little or no credit history, you may opt for a secured personal loan. 

To start, you can use Credible to compare personal loan rates from various lenders in minutes.

Best secured personal loans 

The following five Credible partner lenders offer secured personal loans: 

Avant

Avant has a fast online application process, including an e-signed contract, so it’s a good option if you need money quickly.

  • Loan amounts: $2,000 to $35,000
  • Loan terms: 2 to 5 years
  • Minimum credit score: 550
  • Acceptable collateral: Car
  • Best for: Fast funding

Best Egg

Best Egg offers a decent range of loan amounts, and can pay your creditors directly if you choose a debt consolidation loan. 

  • Loan amounts: $2,000 to $50,000
  • Loan terms: 2 to 5 years
  • Minimum credit score: 600
  • Acceptable collateral: Check with lender
  • Best for: Debt consolidation

LightStream

LightStream offers high maximum loan amounts, and opportunities for rate discounts.

  • Loan amounts: $5,000 to $100,000
  • Loan terms: 2 to 7 years (2 to 12 years for home improvement loans)
  • Minimum credit score: 660
  • Acceptable collateral: Car or motorcycle
  • Best for: Higher loan amounts

OneMain Financial

OneMain Financial offers smaller loan amounts and considers borrowers with fair credit scores.

  • Loan amounts: $1,500 to $20,000
  • Loan terms: 2 to 5 years
  • Minimum credit score: None
  • Acceptable collateral: Car, truck, motorcycle, boat, camper or RV
  • Best for: Borrowers with little or no credit history

Upgrade

Upgrade offers longer loan terms and a lower minimum credit score requirement, making it a smart choice if your credit isn’t great and you want more time to repay your loan. 

  • Loan amounts: $1,000 to $50,000 ($3,005 minimum in GA; $6,005 minimum in MA)
  • Loan terms: 2 to 7 years
  • Minimum credit score: 560
  • Acceptable collateral: Car
  • Best for: Borrowers with fair to poor credit who want longer loan terms

Other lenders to consider

The following two lenders are not Credible partners, so you won’t be able to easily compare your rates with them on the Credible platform. But they may also be worth considering if you’re looking for a secured personal loan.

First Tech Federal Credit Union

First Tech offers some unique collateral options if you don’t want to use your car or another type of vehicle to secure your personal loan. 

  • Loan amounts: $500 to $500,000 (depends on the type of collateral)
  • Loan terms: 2 to 7 years
  • Minimum credit score: Check with lender
  • Acceptable collateral: First Tech Share Certificate (its version of a CD), stock or First Tech savings account
  • Best for: Existing credit union members who want flexible collateral options

Oportun

Oportun secured personal loans are only available in three states, but residents can qualify for a loan even if they have a low credit score. 

  • Loan amounts: $2,525 to $20,000
  • Loan terms: Check with lender
  • Minimum credit score: None
  • Acceptable collateral: Car
  • Best for: Residents of California, Florida and Texas

Methodology

Credible evaluated the best personal loan lenders based on factors such as customer experience, minimum fixed rate, maximum loan amount, funding time, loan terms and fees. Credible’s team of experts gathered information from each lender’s website, customer service department and via email support. Each data point was verified to make sure it was up to date.

You can use Credible to compare personal loan rates without affecting your credit score.

How to get a secured personal loan

You can find secured personal loans from banks, credit unions and online lenders. Applying for prequalification lets you see what rates you might qualify for, which won’t affect your credit score. 

Once you’ve chosen a lender, complete its full application. You’ll be asked to provide details such as your name, address, Social Security number and proof of income. Lenders also typically ask you to indicate how you plan on using the loan funds and how much you want to borrow. You’ll need to specify what asset you’ll be using as collateral, such as a car, your home, money in a savings account or stocks (different lenders may have different requirements for collateral).   

If you’re approved for a loan, you’ll receive a loan agreement that outlines your loan amount, monthly payment amount, annual percentage rate (APR) and loan term. Read through this document carefully before you sign. 

You’ll typically receive your loan funds within one to seven business days (exact funding times will depend on your lender). 

Pros and cons of secured personal loans

Like any financial product, secured personal loans come with benefits and drawbacks to consider: 

Pros of secured personal loans

Cons of secured personal loans

  • Need to provide collateral — Putting up your car or savings account as collateral may give you pause, especially if you’re worried about keeping up with your loan payments.
  • Maximum loan amount may be limited — Most lenders offer a loan amount that’s in line with the value of your collateral. For example, if your collateral is a savings account with $3,000 in it, a lender probably won’t loan you $15,000.
  • Risk losing collateral — If you miss or are late on your monthly payments, you risk having the lender seize the asset you provided as collateral.
  • Usually shorter repayment terms — Secured loans may not come with repayment terms as long as unsecured loans, which means your monthly payments could be higher and potentially stretch your budget too thin.

What to consider when comparing secured personal loans

When you’re looking for a secured personal loan, it’s a good idea to shop around to secure the rates and terms that best suit your needs. Compare the following features:

Is a secured personal loan easier to qualify for than an unsecured personal loan?

A secured personal loan may be easier to qualify for because you’re putting up collateral. When you apply for a personal loan, the lender will look at your credit history, credit score, existing debt and income. 

It’s riskier for lenders to approve borrowers with low credit scores for an unsecured personal loan because if you default, the lender can’t take your property to recoup its losses. But lenders may have more confidence when offering you a secured personal loan since they can take your collateral if you don’t make your payments.

If you’re ready to apply for a loan, Credible lets you easily compare personal loan rates to find one that works for your situation.

Alternatives to secured personal loans

If a secured loan isn’t right for you, consider these alternatives: