BEST OF

Best Secured Personal Loans of 2023

Secured personal loans let you borrow money against the value of an asset like a car or savings. Secured loans may carry lower interest rates, but they also carry risk.

By Annie Millerbernd 

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Most personal loans are unsecured, so approval is based on your creditworthiness. But if you can’t qualify for an unsecured loan, or you don't get the rate you want on a bad-credit loan, a secured loan is one alternative.

This type of loan requires you to pledge collateral in order to borrow money. The downside: If you don’t make timely payments, the lender can seize your asset.

Here's what to know about secured personal loans and where to find them, including online lenders, banks and credit unions.

Note that the information for each lender is specific to its unsecured loans. Qualification criteria and loan details may differ for secured loans.

Best Secured Personal Loans

Our pick for

Secured loans from online lenders

BestEgg
Get rate

on Best Egg's website

Best Egg

4.5

NerdWallet rating 
BestEgg

Est. APR

8.99-35.99%

Loan amount

$2,000-$50,000

Min. credit score

600
Get rate

on Best Egg's website

Upgrade
Get rate

on Upgrade's website

Upgrade

5.0

NerdWallet rating 
Upgrade

Est. APR

8.49-35.97%

Loan amount

$1,000-$50,000

Min. credit score

560
Get rate

on Upgrade's website

OneMain
Get rate

on OneMain Financial's website

OneMain Financial

4.0

NerdWallet rating 
OneMain

Est. APR

18.00-35.99%

Loan amount

$1,500-$20,000

Min. credit score

None
Get rate

on OneMain Financial's website

Our pick for

Secured loans from credit unions

First Tech Credit Union Personal Loan
See my rates

on NerdWallet's secure website

First Tech Credit Union Personal Loan

5.0

NerdWallet rating 
First Tech Credit Union Personal Loan

Est. APR

6.70-18.00%

Loan amount

$500-$50,000

Min. credit score

660
See my rates

on NerdWallet's secure website

Navy Federal Credit Union Personal Loan
See my rates

on NerdWallet's secure website

Navy Federal Credit Union Personal Loan

5.0

NerdWallet rating 
Navy Federal Credit Union Personal Loan

Est. APR

7.49-18.00%

Loan amount

$250-$50,000

Min. credit score

None
See my rates

on NerdWallet's secure website

What is a secured personal loan?

A secured personal loan is a loan you get by pledging something you own in exchange for borrowed money that you repay over time with interest.

Lenders have the right to take your collateral — a vehicle or money in a savings account, for example — but they’ll only take it if you fail to repay the loan. Once the loan is paid in full, the lender no longer has the right to take the collateral.

Like an unsecured loan, your credit, income and other debts are still central to getting approved for a secured loan, but offering up collateral lowers the risk to the lender. In turn, approval odds are better for secured loans and the rate is typically lower.

How to get a secured loan

The process for getting a secured loan can vary based on the type of collateral you’re using, but here are some of the steps you’ll take:

  1. Inquire about the loan. Some lenders offer secured loans only after an applicant does not pre-qualify for an unsecured loan. If you can’t pre-qualify with the lender, or you don’t see a secured loan option, ask the lender directly about secured loans.

  2. Check your budget. Review your cash flow to find out how much you can afford to pay toward the loan each month. Use a personal loan calculator to see what annual percentage rate, loan amount and repayment term you’d need to keep monthly payments affordable.

  3. Choose a lender. Compare lenders to see what kind of collateral they accept and what rates they offer.

  4. Gather documents. Before you apply, gather the documents most lenders require for an application. These can include a government-issued ID, bank statements, W-2s and pay stubs. You may also need documents for the collateral, such as a car title.

  5. Apply. Most lenders have online applications. Once you submit, an approval decision may take a couple of days or longer if a lender has to assess the collateral’s value.

Pros and cons of secured loans

Weigh the benefits of getting a secured loan against the potential drawbacks before you borrow.

Pros

  • Better approval odds. A lender is more likely to approve a secured loan application.

  • Lower interest rates and higher loan amounts. Because the risk of losing money is lower for the lender, you may be approved for a larger loan at a lower rate.

Cons

  • The lender could take your collateral. If your car is collateral for a loan and you need it to get to work, for example, losing it could put you in a worse situation than before you borrowed.

  • Not as widely available as unsecured loans. Many banks, credit unions and online lenders offer only unsecured loans.

Secured loan examples

Home equity loans and HELOCs: A home equity loan or line of credit is a second mortgage that lets you access cash based on the value of your home. As with the initial mortgage, a lender can take your house if you don’t repay.

Auto-secured loans: With an auto-secured loan, the lender considers information like the car’s make, model and year — in addition to your credit and finances — to decide your rate. If approved, you send the lender your title and they return it once the loan is paid off. These are different from auto title loans, which can have triple-digit APRs (more on those below).

CD loans: If you have a certificate of deposit with a bank, you may be able to use it as collateral for a personal loan. Rates are usually low on CD loans — typically starting a couple of percentage points above the CD rate — and it’s one way to access funds without withdrawing the CD early and paying a penalty.

401(k) loans: An employer-sponsored 401(k) plan may allow employees to borrow from their retirement account for up to five years. Rates are usually low on 401(k) loans, but by borrowing from the account, you’re missing out on market gains and compound interest from your retirement savings.

Where to get a secured personal loan

Banks: Banks usually offer a savings- or CD-secured loan. An account you already have with the bank will be collateral, and you can’t access that money until the loan is repaid.

Credit unions: Some credit unions offer share-secured loans, which is another term for savings-secured loans. The credit union will hold onto your savings while you repay the loan.

If your credit union doesn’t offer these, you may qualify for an unsecured loan, because credit unions are known to have softer borrower requirements and lower APRs.

Online lenders: Most online lenders that provide secured loans require a vehicle as collateral. Some let you apply for this loan upfront, but others may show you the option only after you’ve tried applying for an unsecured loan.

Many lenders let you check your rate on an unsecured loan without affecting your credit, so it doesn’t hurt to take the steps to pre-qualify with multiple lenders.

You can use NerdWallet’s lender marketplace to compare rates on unsecured loans.

Secured loans to avoid

Pawn loans: Pawnshops let you hand over valuables in exchange for cash that you must repay, typically within a couple of weeks. These loans can have 200% APRs and may be difficult to repay. If you don’t repay, the pawnshop will keep your item.

Car title loans: These are high-interest, short-term loans of usually a few hundred or thousand dollars. Because they’re difficult to repay on time, this type of loan can encourage repeat borrowing, which can lead you into a debt cycle. Avoid auto-secured loans with rates above 36%, the highest rate consumer advocates say an affordable loan can have.

Last updated on December 13, 2022

Methodology

NerdWallet’s review process evaluates and rates personal loan products from more than 35 financial institutions. We collect over 45 data points from each lender, interview company representatives and compare the lender with others that seek the same customer or offer a similar personal loan product. NerdWallet writers and editors conduct a full fact check and update annually, but also make updates throughout the year as necessary.

Our star ratings award points to lenders that offer consumer-friendly features, including: soft credit checks to pre-qualify, competitive interest rates and no fees, transparency of rates and terms, flexible payment options, fast funding times, accessible customer service, reporting of payments to credit bureaus and financial education. We also consider regulatory actions filed by agencies like the Consumer Financial Protection Bureau. We weigh these factors based on our assessment of which are the most important to consumers and how meaningfully they impact consumers’ experiences.

This methodology applies only to lenders that cap interest rates at 36%, the maximum rate most financial experts and consumer advocates agree is the acceptable limit for a loan to be affordable. NerdWallet does not receive compensation for our star ratings. Read more about our ratings methodologies for personal loans and our editorial guidelines.

To recap our selections...

NerdWallet's Best Secured Personal Loans of 2023

Frequently asked questions