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Best Secured Personal Loans

If you can’t qualify for an unsecured loan or you want to get a lower APR, a secured personal may be just what you need. Some online lenders allow you to use your house or car for collateral and still offer quick funding.

Best Secured Personal Loans
Lindsay Frankel
Written by:Lindsay Frankel
Personal Finance Expert

You might need a secured personal loan to help you consolidate debt, pay for emergency repairs or medical bills, or fund a large purchase like a new appliance. To be eligible for a secured personal loan, you’ll need equity in your home or vehicle. But you can often get a lower APR and higher borrowing limits with a secured loan. In our search for the best secured loans for bad credit, our team of financial experts reviewed and ranked more than 30 online lenders to help you make an educated decision on the best secured loan for your needs.

Our Top Picks for Best Secured Personal Loans

bestegg_logo
  • Wide range of loan amounts available
  • Fast application process
  • Direct payments to creditors as an option
Min. Credit Score
Min. Credit Score Undisclosed
Loan Amounts
Loan Amount $2K-$50K
Est. APR
Loan Repayment 36-60 months
 upgrade_logo
  • Funding as soon as the next day
  • Can be approved with fair credit
  • Variety of discounts on rates
Min. Credit Score
Min. Credit Score Not disclosed
Loan Amounts
Loan Amount $1K-$50K
Est. APR
Loan Repayment 24 to 84 months
onemain_logo
  • Offers joint and secured loans
  • Accepts low credit borrowers
  • Can fund a loan the same or next business day
Est. APR
Loan Repayment Up to 60 months
Loan Amounts
Loan Amount $1.5K-$20K
Min. Credit Score
Min. Credit Score Undisclosed

How to Choose the Best Secured Personal Loan

When evaluating lenders, our team of financial experts considered the following parameters, which may be helpful for you to pay attention to as you narrow down your options:

  • Loan Features: Find a secured lender who can give you the amount you need with a monthly payment you can afford, and make sure you aren’t restricted from using the funds for what you need.
  • Interest Rates and Fees: Choose the lender with the lowest APR that you can qualify for, and always avoid lenders that charge prepayment penalties.
  • Application Process: Prioritize lenders that offer a prequalification option that won’t hurt your credit, and make sure you can get the funds in a timely fashion.
  • Qualification Process: Eliminate any lenders you can’t qualify for based on your credit score or income. If there’s a membership requirement, make sure you can meet it before applying.
  • Customer Support: Make sure the lender’s customer support team is conveniently accessible to you. We prefer lenders that provide extended customer service hours and a live chat.
  • Online User Reviews: Check out what customers are saying on Trustpilot, ConsumerAffairs, and Credit Karma. Look for patterns in complaints that might be cause for concern.
  • Perks and Bonuses: Some lenders offer payment flexibility, hardship protection, or perks like mobile app management. If any of these are important to you, verify that the lender offers them.

Best Secured Personal Loans for 2022 — Full Overview

1. BestEgg — Best for Homeowners

The Homeowners Advantage Program from BestEgg combines the speed and convenience of an unsecured personal loan with the low APRs and high borrowing amounts available with a home equity loan. Since the loan is secured with things like ceiling fans and window shutters instead of your home itself, no appraisal is required. But you can still borrow as much as $50,000 and receive the funds within a day.
Pros
Borrow up to $50,000
Low APRs starting at 3.99%
Few restrictions on use
Prequalify without hurting your credit
Funds delivered in as little as one business day
Friendly to fair credit borrowers
Cons
Minimum $10,000 borrowing amount
Only two term choices
Charges an origination fee up to 5.99%
Requires home equity

bestegg
With BestEgg, you can borrow between $10,000 and $50,000 secured by the fixtures in your home and repay the loan in three or five years. APRs range from 3.99% to 14.99% and there is an origination fee between 0.99% and 5.99%. There are no prepayment penalties to worry about, but BestEgg does charge a late payment fee of $15. Additionally, if you default, BestEgg will have the right to repossess the fixtures in your home. While BestEgg doesn’t specify a minimum credit score requirement, the lender notes that you’ll generally need a score between 550 and 600 to qualify. While the best rates are reserved for customers earning six figures, there are no minimum income requirements. About half of applicants receive their funds within one business day.

The Bottom Line

The BestEgg Homeowners Advantage program is less risky and more straightforward than a home equity loan, and you can get the funds much faster, which makes BestEgg the best secured lender for homeowners. It’s ideal for high-income homeowners with plenty of equity in their home, but it’s also accessible to fair credit borrowers.

2. Upgrade — Best for Flexible Repayment

You can apply for an unsecured loan through Upgrade, and if the lender believes you would benefit from putting forth collateral, you’ll be asked for some more information to secure the loan with the equity in your vehicle. You can even apply if your car is jointly owned. Plus, Upgrade offers a range of repayment terms from two to seven years and the option to change your due date for flexibility.
Pros
Flexible repayment terms from 24 to 84 months
Offers auto secured loans, even with jointly owned vehicles
Allows joint applications
Option to change due date
Prequalify without hurting your credit
No prepayment penalties
Open to fair credit borrowers
Discount for rewards checking customers
Cons
Charges an origination fee
May result in repossession if you default
Limited Power of Attorney required prior to funding

upgrade
Upgrade offers personal loans in amounts ranging from $1,000 to $50,000 with repayment terms ranging from 24 to 84 months. APRs start at 5.94% with Autopay and are capped at 35.97%. Upgrade charges an origination fee between 2.9% and 8%, which is deducted from the funds you’ll receive. If Upgrade believes you would benefit from a collateral loan, you’ll be invited to provide more information about your vehicle. This requires you to mail a notarized Limited Power of Attorney, which slows down the funding process. There are no disclosed credit score or income requirements, but the lender is reportedly welcoming to fair credit borrowers.

The Bottom Line

If you’re looking for a secured personal loan and have equity in your vehicle, Upgrade will give you the most flexibility with repayment. It’s worth prequalifying with the lender even if you’ve made credit mistakes. However, if you need the money fast, opt for another lender.

3. OneMain Financial — Best for Bad Credit

OneMain Financial uses alternative data to determine applicants’ creditworthiness, so there’s no minimum credit score to apply. If you have bad credit, you’ll likely be offered a secured personal loan. Since loans from OneMain Financial come with high APRs, they’re best for people who don’t have home equity or can’t qualify for other products.
Pros
Open to poor credit borrowers
Allows you to choose and change your due date
Joint applications available
See your offers without hurting your credit
No prepayment penalties
Choice of four terms
Excellent customer service reviews on Trustpilot
Can apply at a branch
Offers cash-out refinancing for borrowers who don’t own their cars
Cons
Charges an origination fee
High APRs starting at 18%
Maximum $20,000 borrowing amount

OneMain
You can borrow between $1,500 and $20,000 from OneMain Financial, although some states have higher minimums, and choose between four repayment terms ranging from 24 to 60 months. If you’re offered a secured loan, you’ll provide information about your motor vehicle. APRs range from 18% to 35.99% and OneMain also charges an origination fee that can be up to 10% or up to $500, depending on where you live. The lender also charges late fees, which vary by state, but never prepayment penalties. There are no minimum credit score or income requirements, but OneMain will check to see that you can afford repayment along with your other financial obligations. OneMain’s secured personal loans can be used for a variety of purposes. While you can receive unsecured funds the same day, collateral loans require an appraisal. If you don’t have enough equity in your vehicle for a secured loan, you may also qualify for cash-out refinancing of your current car loan.

The Bottom Line

If you have bad credit without home equity, OneMain Financial or Oportun will likely be your best options for secured loans with a reasonable APR. You can and should prequalify with both lenders if they’re available in your state. Despite OneMain’s relatively high starting APRs, customers seem to appreciate the speed and ease of funding. And since rates are capped at 35.99%, a secured personal loan from OneMain is much safer than other high-interest options out there for bad credit borrowers.

4. Oportun — Best for Quick Loans

With Oportun, it’s possible to receive the funds for a secured loan the same day. Oportun is also open to working with borrowers with all sorts of credit issues, including past bankruptcies. However, you can only get a secured loan from Oportun in Arizona, California, Florida, New Jersey, and Texas. You also need to solely own your vehicle and the title must be free and clear.
Pros
Open to poor credit borrowers
Prequalify without hurting your credit
Funding within the same day
No prepayment penalties
Co-signed applications may be allowed
Cons
Only available in Arizona, California, Florida, New Jersey, and Texas
Shorter terms than other lenders
Must own your vehicle solely and entirely
Charges an origination fee
Maximum $20,000 borrowing amount

oportun
Secured loans from Oportun are available in amounts ranging from $2,525 to $20,000. Terms vary by state but are generally shorter than at other lenders, typically ranging from 18 to 24 months or 24 to 30 months. APRs are capped at 35.95%. Oportun also charges an origination fee, which varies by state, and late payment and returned check fees. Once you are approved and upload the required documents, you can get your funds as soon as the same day. There are no minimum income or credit score requirements, and Oportun reports that the lender is even willing to work with customers who have faced bankruptcy.

The Bottom Line

If you have bad credit, own your vehicle, and live in one of the five states where Oportun issues secured loans, it’s definitely worth prequalifying with the lender. You should compare your offer with a rate check from OneMain Financial as well. available to bad credit borrowers.

Best Secured Personal Loans — Feature Comparison

Lender

Est. APR

Min. Credit Tier

Loan Amount

Loan Term

BestEgg

3.99% to 14.99%

Fair

$10,000 to $50,000

36 or 60 months

Upgrade

5.94% to 35.97%

Fair

$1,000 to $50,000

24 to 84 months

OneMain Financial

18.00% to 35.99%

Poor

$1,500 to $20,000

24 to 60 months

Oportun

Up to 35.95%

Poor

$2,525 to $20,000

18 to 30 months  

What Is a Secured Personal Loan?

A secured personal loan is a lump sum installment loan that requires the borrower to offer collateral to receive the funds. The lender takes a lien on the collateral, such as a motor vehicle, to protect against the chance of default. Once the loan is repaid with interest, that lien is removed.

How Do Secured Personal Loans Work?

You typically need to have a minimum amount of equity in your home or vehicle. Some lenders that offer auto-secured loans may require you to own your vehicle outright. By accepting a secured loan, you give the lender the right to take possession of the collateral in the instance of default. However, you can still use your collateral while the loan is outstanding, as long as you continue making payments.

Reasons to Get a Secured Personal Loan

Applying for a secured personal loan can help you get a lower rate, but it’s still not a good idea to borrow money for something that isn’t a need. Some common circumstances when it may a good idea to get a secured loan are:

  • Debt consolidation to save money on interest
  • Home or vehicle repairs
  • Large purchases, such as appliance replacement
  • Medical bills
  • Emergency travel
  • Moving costs
  • Wedding expenses

How to Get a Secured Personal Loan

The process will vary by lender. But in general, you can expect the following.

  • See where you stand: Check your credit report at AnnualCreditReport.com and dispute any errors. Next, check to see how much equity you have in your home or vehicle, and eliminate any lending options you don’t qualify for based on the collateral you have.
  • Prequalify with a few lenders: Choose two or three lenders that you think you can qualify for and check your rate. This will only require a soft credit check.
  • Select the best offer: Choose the lender that can offer you the lowest APR, the fewest fees, and the best terms.
  • Plan for repayment: Secured loans can be risky, so it’s important to have a plan for repayment. Build your monthly payment into your budget and make sure you won’t be stretched too thin.
  • Provide additional documentation and apply: You’ll need to prove you own your collateral, and some lenders will require an appraisal or a Limited Power of Attorney. Once you formally submit your application, the lender will run a hard credit check, which will minimally and temporarily decrease your credit score.
  • Sign and accept: After reading through the terms, sign your loan documents in the lender’s online portal.
  • Wait for direct deposit: This can happen as soon as the same day or up to a couple of weeks later if you’re required to mail documents or schedule an appraisal.

Where Can You Get a Secured Personal Loan?

Secured personal loans are most commonly offered at banks and credit unions, but a few online lenders also offer them. The process is often streamlined and can be faster when you go through an online lender. With some lenders, you may be able to apply directly for a secured loan. With others, you’ll submit a personal loan application and may be offered either an unsecured or secured loan. If you’re looking for a collateral loan with bad credit, your best bet will likely be an online lender like OneMain Financial or Oportun.

Secured Loans to Avoid

  • Title Loans: These are short-term, no-credit-check loans secured by the title of your vehicle. Because the APR is typically 300%, title loans are risky and difficult to repay. In fact, one in five title loan borrowers end up having their vehicles repossessed by the title lender, according to the CFPB.
  • Secured Loan Scams: If anyone asks you to “secure” a loan with upfront payment, such as a prepaid card, it’s definitely a scam. Should you choose to work with a secured lender that is not on this list, make sure they are registered in your state.

Conclusion

A secured loan can provide you with a lower APR or even qualify you for a loan you might otherwise not be eligible for. But since there’s always the risk of losing your possession if you default, you should carefully plan for repayment of your secured personal loan. Make sure you choose a term with a monthly payment you can afford, and choose the best option that you qualify for based on your available equity and creditworthiness.

Frequently Asked Questions (FAQ)

Are Secured Personal Loans Easier to Qualify For?

Yes. Because collateral gives lenders some assurance that they’ll be able to recoup the funds, APRs on secured personal loans are lower and qualification requirements are typically looser. Some lenders may offer you a collateral loan for bad credit if you don’t qualify for an unsecured personal loan.

Do Personal Loans Hurt Your Credit?

Most personal loans require a hard credit check, which will cause a slight dip in your credit score. But if you make your payments on time, your credit may actually improve as you repay the loan, especially if you used the money to consolidate debt and lower your amounts owed. A personal loan also adds to your credit mix, which accounts for 10% of your score.

Do Secured Loans Affect Your Credit Score?

A secured loan will impact your credit in the same way an unsecured loan would. Your credit score will decrease slightly after the hard credit check, but as you make your payments on time and lower your debt balance, your credit may improve.

What Is the Interest Rate on Personal Loans?

Interest rates vary depending on the type of collateral you provide and your creditworthiness. The average APR for a 24-month personal loan from a commercial bank is 9.41%, according to the St. Louis Fed. Longer-term loans typically have higher rates, as do personal loans for bad credit.

Can You Pay Off a Secured Loan Early?

Yes. Very few lenders charge prepayment penalties, and we recommend avoiding those that do from the start. As long as your lender doesn’t charge a penalty for early repayment, you’ll save money on interest if you pay off the loan early.

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