Secured personal loans are loans backed with collateral, like a savings account, certificate of deposit, or car, that allow you to access funds for things like unexpected expenses, debt consolidation, or to cover moving or vacation costs. If you’re unable to make your payments or default on the loan, the lender usually has the authority to claim your assets to pay off the loan. Having a secured personal loan can result in lower rates and more lenient credit score requirements.
The best secured personal loans are easy to apply for, have low-interest rates, and have little to no fees. Most secured personal loans can be applied for online with very few exceptions. In most cases, you get to keep the collateral, meaning you would still earn interest on your savings account or CD, or you would be able to keep driving your car while you're paying off the loan.
Best Secured Personal Loans for 2021
Best Overall : First Tech Federal Credit Union
Why we chose it: First Tech Credit Union has the most options for secured personal loans and lines of credit and the best APRs.
Low interest rates
3 different collateral options
Loan terms up to 96 months
No branch access outside the Portland, OR, area
Must hold accounts with First Tech Credit Union
Founded in 1952 by tech industry employees, First Tech Federal Credit Union offers low rates and easy payment options for its secured personal loans. While their branches are only located in and around Portland, Oregon, they serve customers all across the country. You will need to be a member of the credit union to obtain a loan, but the process is relatively easy.
To qualify, you need to work for a company on their partner list, the state of Oregon, live or work in Lane County, Oregon, or belong to the Computer History Museum or the Financial Fitness Association. However, if you don’t qualify with any of these, First Tech Federal Credit Union recommends giving them a call; they might be able to help find a way to qualify for membership.
Unique to anyone else on this list, First Tech Credit Union offers stock secured loans. You can use the stock you own for the company you work for or stock listed on the NYSE, NASDAQ, or AMEX to secure this loan. For a stock secured loan, you can borrow anywhere from $25,000 and $1,000,000 with an APR as low as 4.50% (as of March 2021).
First Tech also offers a stock line of credit with the same range and an APR as low as 9%. They also off savings and certificate secured loans, which allows the borrower to borrow anywhere from $500-$500,000 against their First Tech share certificate or savings account for an APR as low as 3%.
Aside from offering their stock-secured loans, First Tech also offers savings and certificate of deposit secured personal loans as well. Both loans can range from $500-$500,000, based on the amount in the collateral account. The term can be up to 96 months for a savings secured personal loan while a certificate secured loan can be as long as the certificate maturity date. Both options boast an APR of 3.00% plus the savings or certificate rate.
First Tech has an easy online loan application that can be completed in a matter of minutes; they don’t charge any origination, application, or annual fees; and you get secure online and mobile access to your accounts to view balances and make payments.
Best for Good Credit : Wells Fargo
Why we chose it: Wells Fargo Bank provides competitive rates for those with good credit and allows the flexibility for the customer to choose the right loan structure for them, either a loan borrowed in one lump sum or a line of credit that can be borrowed against, paid back and borrowed from again.
No origination fee
Can apply online, in the branch, or over the phone
Offers the option of secured personal loan or line of credit
Must have a savings or certificate of deposit with Wells Fargo
Line of credit has a $25 annual fee
Charges $39 late payment fee
Wells Fargo Bank is a large, well-known national bank that offers a robust online banking system that allows its customers to be able to have access to all their banking and loan information in one place
Wells Fargo Bank offers their customers with good credit a secured loan or line of credit with the requirement of either a Wells Fargo savings account or a Wells Fargo certificate of deposit to use as collateral. The loans can be taken out for any amount between $3,000 and $250,000 and their lines of credit range from $5,000 to $250,000.
The APR for their secured personal loans varies from 5.50%–13.79% based on credit. Their secured personal line of credit has a variable APR of 7.00%–10.50%. Wells Fargo Bank offers a relationship discount on your APR of 0.25% (as of March 2021). To qualify for the discount you must have a Wells Fargo checking account and have your loan payments automatically deducted from that checking account.
Wells Fargo Bank does not charge an origination fee nor do they charge a prepayment penalty on either the loans or lines of credit but there is an annual fee of $25 for the line of credit. Both the loan and line of credit have a $39 late payment fee, which is comparatively higher than other institutions. The loan terms offered are as short as a year but can go up to 10 years, and you’ll receive the funds from the loan in one to three business days.
Best for Bad Credit : Avant
Why we chose it: Avant is known to approve loans for people who don't have the best credit score or are looking to improve their credit history by taking a secured loan.
Automobile secured loan
Low minimum required credit score
Funds deposited as soon as the next day after approval
High interest rates
Short loan terms
2.5% administration fee for all loans
Avant is the lender for anyone who has a fair to bad credit score. For their auto secured, personal loans require a minimum credit score of only 550. Loans range from $5,000–$25,000 with an APR anywhere from 9.95%–35.99% (as of March 2021) and terms from 24–48 months. The loan amount is based on the value of your car or truck, employment verification, and credit history.
There is a 2.5% administration fee for each loan that will be taken from the proceeds. There will also be a lien fee. A lien fee is paid to the state where your car is registered to have a security interest (or lien) placed on the vehicle's title. The fee varies by state as it's set by each individual state. It ranges anywhere from $4–$95
The auto being used as collateral must be paid off in full, currently registered, under 10 years old, and you must have the title to surrender to Avant. The application can be completed online, and the final documents, including the title, can be mailed to Avant upon completion.
Best Online Lender : Upgrade
Why we chose it: Upgrade has an easy-to-navigate website with clear instructions, and checking your rate doesn't impact your credit score. Upgrade has customizable loan options and opportunities for rate discounts.
Easy online application
No prepayment fees
Provides flexible loan options to best suit borrower
Charges origination fee
It can take up to a week to get funds
Additional documentation may be required before final approval
Launched in 2017, Upgrade is an online bank offering auto-secured loans (issued by their lending partners) from $1,000–$50,000 (loans offered in Georgia have a $3,005 minimum loan amount and loans offered in Massachusetts have a $6,400 minimum loan amount.) The APR can range from 5.94%–35.97%, and they charge an origination fee from 2.9%–8% (as of May 26, 2021).
During the application process, you'll be asked to upload documentation, including your vehicle registration, insurance card or policy, pay stubs, and government-issued photo ID. You will be required to mail the signed limited power of attorney, which allows Upgrade to place a lien on your car's title. In some cases, the power of attorney form does need to be notarized.
During the final stages of your loan application, Upgrade will ask that you mail in your car's title. While you get to keep the vehicle in your possession, Upgrade's name will appear on the car's title until the loan has been paid off. If a borrower fails to make their loan payments and their loan becomes delinquent, Upgrade has the right to take possession of your car to help pay off that loan.
Upgrade is excellent for people with less-than-perfect credit who have a steady monthly income. The secured personal loans that Upgrade offers are fixed-rate and fixed-term, meaning that the loan payments will remain the same throughout the life of the loan. With a steady income, like employment, you are more likely to be approved, even with a lower-than-average credit score. This will help you get the funding that you need while also helping improve your credit history with on-time payments.
Upgrade offers APR discounts if you sign up for their rewards checking account and have your payroll directly deposited into the account. It also has an intuitive and easy-to-follow online application process, an extensive virtual Help Center, and a helpful customer service department that you can speak to by phone.
Best for Smaller Loans : Regions Bank
Why we chose it: Regions Bank has a variety of loan options starting at $250.
Loan amounts starting as little as $250
Up to 100% of verified available balance in the collateral account
Funds available at loan closing
The variable interest rate for line of credit
Loan processing fee
Loan closing must occur in a branch
No rate- and fee-specific information given without an application
Founded in 1971 and headquartered in Birmingham, Alabama, Regions Bank offers a savings account or money market account secured personal loan from $250 and up to 100% of the verified available balance in their collateral account, minus any fees for the loan. A secured savings loan secured by a certificate of deposit starts with loans as little as $2,000 and up to 100% of the verified deposit balance minus any loan fees.
For both the savings secured line of credit and loan, Regions Bank does offer rate discounts based on your banking relationship with Regions Bank, like having multiple savings accounts, a wealth management relationship with Regions Bank, or your loan payments automatically debited from your Regions Bank checking or saving account on loans of $5,000 or greater.
A deposit secured personal loan from Regions Bank has a fixed APR, which is based on the collateral type and other factors like your credit history. The savings secured line of credit APR is variable, meaning that it fluctuates. Additionally, there is a maintenance fee of $50 that is charged to the line of credit annually, starting one year after the opening date.
While the deposit secured loans and lines of credit can be applied for at the branch, online, or over the phone, the closing must take place inside of a branch. Regions Bank has a 15 state service area and has locations in Alabama, Arkansas, Florida, Georgia, Illinois, Indiana, Iowa, Kentucky, Louisiana, Mississippi, Missouri, North Carolina, South Carolina, Tennessee, and Texas.
Best for Quick Funding : Navy Federal Credit Union
Why we chose it: Navy Federal Credit Union offers both a savings account and certificate of deposit secured personal loan and will give you access to the loan funds via direct deposit in as little as 24 hours after closing.
Quick loan funding
Low interest rates
Loan terms up to 15 years
Must be a member of the credit union
High minimum loan amounts
Not a good option for those with fair to bad credit
Navy Federal Credit Union offers saving and certificates of deposit secured loans and quick funding once the loan is closed. With a savings secured loan, your savings or certificate account continues to earn dividends while being used as collateral.
There is a $25,000 loan minimum for loan amounts for 61 to 84 months and a $30,000 loan minimum for 85–180 month loans that are secured by a savings account. The rate for a saving secured loan also does depend on the term as well. A loan term up to 60 months means the ARP is the interest rate of the savings account + 3.00% and a loan term from 61 months to 180 months the APR is the savings interest rate + 2.00% (as of March 2021).
For the certificate of deposit, you can borrow up to 100% of your certificate’s value with the minimum loan amount of $1,000, with the loan amount not exceeding the certificate balance. The term can be up to 60 months, but it must be equal to or less than the certificate term. The rate for a certificate of deposit secured loan is the certificate’s interest rate + 2.00%. There are no fees associated with these loans. At the time of closing, Navy Federal will fund the loan, by direct deposit, into the account of your choosing within 24 hours.
To become a member of Navy Federal Credit Union, you or one of your family or household members must have ties to any of the armed forces (Army, Marine Corps, Navy, Air Force, Coast Guard, or Space Force), the Department of Defense, National Guard, or be a veteran.
Best for Non-Cash Collateral : Diamond Banc
Why we chose it: Diamond Banc offers alternative-collateral loans, accepting diamond and designer jewelry, luxury watches, designer purses, rare coins, bullion, scrap metal, and silverware as collateral.
Non-cash collateral secured personal loans
Flexible payment options
No income verification, credit check, or employment verification needed
Does not report to the credit bureaus
Not recommended for long-term loans
High interest rate
Many people looking to take out a secured personal loan don't have the cash to secure it. If you fall into that category, you might want to consider Diamond Banc, a highly respected alternative-collateral. The company has been a trusted diamond buyer and seller since 1896, and it is driven to provide the same professionalism and confidentiality as a traditional bank.
Interest is charged monthly and can be as low as 3%, which equates to 36% APR, while their average loan interest rates are 5%–15% every 30 days, or 60%–180% APR (as of March 2021); however, loans greater than $100,000 can qualify for even lower rates. Because of the higher APR rates, their customer service department never recommends a collateralized loan with them as a long-term solution. Anything over two years would result in significant interest rate payments.
Their average loans are approximately seven months long. Diamond Banc will spend time with you and talk about the different options and the payment schedule and make sure that you're comfortable with the terms before moving forward. and.
Since the loans are private loans, Diamond Banc does not report them to the credit bureaus. This means your credit score is not affected, positively or negatively, but if you default on the loan, the company’s only recourse is to take ownership of your collateral. So if you put up your engagement ring as collateral and you default on the loan, you forfeit ownership of the ring to Diamond Banc.
The company is flexible and willing to work with customers. If your item of value isn't listed on their website, they encourage you to call, and they're happy to work with you to find a mutual solution.
There are many reasons to obtain a secured personal loan. Whether you're looking to consolidate debt, take that dream vacation, or make car repairs, you want to make sure that it's the best option for you and your finances, and select a lender that provides the best benefits for your situation.
While there are many good choices for secured personal loans, we recommend First Tech Federal Credit Union as our best overall choice due to its low rates, long loan terms, and various collateral options. However, depending on your needs, you might want to consider some of the other banks on our list.
|Best Secured Personal Loans|
|Provider||Why We Picked It||APR|
|First Tech Federal Credit Union||Has low rates, helpful customer service, and it's easy to become a member||As low as 4.5%|
|Wells Fargo||A large nationally-recognized bank and doesn't charge origination fees||5.50%–13.79%|
|Avant||Known for lending to those with fair-average credit scores||9.95%–35.99%|
|Upgrade||Has an intuitive and easy-to-navigate online application with excellent customer service||5.94%–35.97%|
|Regions Bank||Offers loan amounts that start at $250||Fixed, based on credit score|
|Navy Federal Credit Union||A quick funding lender with low rates for members||APR varies based on the collateral account|
|Diamond Banc||A unique alternative-collateral lender||36%–180%|
What Is the Difference Between a Secured and Unsecured Personal Loan?
The difference between a secured personal loan and an unsecured personal loan is the collateral. With a secured loan, you're offering up something that you own, usually a savings account or valuable item, like a car, as collateral for the loan. The collateral then has a hold placed on it, so you cannot spend the money in the savings account or sell the car to someone else for the life of the loan. If you were to default on the loan or are no longer able to make payments, then the lender has the authority to claim your assets to pay off the loan.
In the case of an unsecured loan, you don't have to put up collateral to take the loan. The loan approval is based solely on your perceived ability to pay back the loan, like a credit score, employment verification, and other determining factors.
Additionally, secured personal loans differ from home equity loans or auto loans because the collateral you're using does not have to be what you're using the funds for. For example, if you put your car up as collateral for a personal loan, you can use that money to cover moving expenses, while if you take out an auto loan, the funds would strictly be for purchasing a car.
Is it Easy to Get a Secured Personal Loan?
While getting a secured loan is easier to be approved for than an unsecured loan for larger amounts, you do still have to be approved. The lender's risk is less when collateral is put up, but many lenders still check credit score, employment, and other risk factors.
What Happens if I Default On a Secured Personal Loan?
Missing payments or defaulting on a secured personal loan can negatively impact your credit history and make it more difficult to get financing in the future. In addition to the credit consequences, if you default on a secured personal, the lender usually has the authority to take possession of the collateral and use it to pay off the balance of the loan.
Can I Pay off My Secured Personal Loan Early?
Early payment depends solely on your lender. Although most lenders do allow early payoffs without penalty, make sure to check with your lender before signing any documents if there is a prepayment penalty.
What Should I Look for in a Secured Personal Loan?
There are some considerations to take into account when looking at a secured personal loan. To make sure that a secured personal loan is the right decision for you, ask yourself these questions:
- What is my credit score? (You can usually view your credit score for free online.)
- What is the loan being used for? Are there any other options to pay for that?
- Can I afford the monthly payment?
- How long do I want to be paying the loan back?
- What is the interest rate? How much interest would I be paying for the life of this loan?
- Are there any prepayment penalties? If I pay more than the monthly payment, will it go to the principal?
- What fees am I going to pay? Origination fees? Lien fees? Processing fees?
What Effect Does a Secured Loan Have on My Credit Score?
Secured loans, in general, have the same positive and negative effects on your credit score as an unsecured loan. The lender will report if you have been paying consistently on your loan, and that will help improve your credit score. Consequently, if you miss payments or are late or behind on the loan, that will negatively impact your credit score as well.
What Can I Use a Secured Personal Loan For?
You can use a secured personal loan for several things. For instance, it can be used to consolidate higher-interest debt, pay for a wedding, vacation, medical bills, or even to finance a big purchase like new appliances or a pool.
We evaluated over a dozen banks, credit unions, and online lenders to find the best options for a secured personal loan. We evaluated the loan amount range, the minimum loan amounts, the maximum that the lender would loan based on collateral, the estimated APR that would be paid on the loan, as well as the terms for the loan (in months).
We also considered the type of collateral that the lenders would take to secure the loan. Finally, we evaluated all fees associated with taking out the loan, including but not limited to origination fees, processing fees, legal fees, and lien fees.
All of our top choices offer a reasonable APR, have minimal fees, if any, and good reputations for fair lending practices.