Already applied? My Offers
Best viewed in Landscape mode

Secured Personal Loans

How They Work and Where to Find Them

If you haven’t always been the most responsible borrower, you might now be facing the reality that few financial institutions are willing to loan you money without requiring you to put up some form of collateral they can keep in the event you fail to make your payments. Such collateral loans are nothing new, of course, though they have evolved since the dawn of the internet, and today’s landscape of secured loans online has grown incredibly competitive.

So if you’re new to today’s world of secured personal loans, here’s an overview of what they are, how they work, and which lenders might be best for you.

How Do Secured Loans Work?

Are you wondering how a secured loan works? It’s pretty simple, actually. First, you and your lender of choice agree on the monetary value of an asset. (This is usually based on an appraiser’s estimate.) Then, the lender gives you access to funds equivalent to that asset’s value. By borrowing against the value of your asset, you may qualify for a loan with better terms than you would otherwise obtain. It’s critical to keep in mind, however, that if you don’t repay your loan in a timely manner, you stand to lose whatever possession you put up as collateral.

Where to Get a Secured Personal Loan

Not every lender offers personal loans with collateral<, but several of them do. Here’s a look at a few of the most popular providers of secured loans, followed by our picks for the best one online.

Company APR Loan Limit Collateral
OneMain* 16.05% -35.99% $1,500 -$25,000 Cars, trucks, boats, motorcycles
LightStream* 3.84% -17.49% $5,000 -$100,000 Auto title for secured loans
Wells Fargo* 5.50% -13.79% $3,000 -$250,000 Savings accounts or CDs
Mariner Finance* 24.00% -36.00% $1,000 -$25,000 Cars, boats, and even homes

Click to compare estimated rates on PrimeRates.

*Terms are for unsecured loans and may vary for secured loans.

  • OneMain Financial: OneMain accepts cars, trucks, boats, motorcycles, and recreational vehicles for two- to five-year loans from $1,500 to $25,000 with interest rates ranging from 16.05% to 35.99%.
  • LightStream: Offering secured auto loans exclusively for those with strong credit scores, LightStream holds the lien to the vehicle with APRs from 3.84% to 17.49% for two to seven years.
  • Wells Fargo: With Wells Fargo, you can use a savings account or a CD to secure a loan from $3,000 to $250,000 with an interest rate falling between 5.50% and 13.79%.
  • Mariner Finance: Cars, boats and even homes can be used to secure Mariner Finance loans from $1,000 to $25,000, but limits on amounts do vary by state.

The Best Secured Loans from Online Lenders

When it comes to secured loans, OneMain and Lightstream are head and shoulders above other online lenders. But these two institutions aren’t identical in how they work. Here’s a quick comparison to help you discover which one might be better for you.

OneMain: With OneMain, you can apply for a secured loan with a car title or other collateral that could help you qualify for a larger amount and a lower APR than you’d get with an unsecured loan. This lender’s average APR on auto-secured loans is 20%, but applicants with poor credit may pay as much as 36%.

OneMain Financial

APRs: 16.05% – 35.99%
Loan Terms: 24 – 60 months
Loan Amount: $1,500 – $30,000
Fees: None
Minimum Credit Score: 580, typically for those with poor to fair credit
Time to Funding: Usually 6 days
Secured Loans: Typically offers lower starting rates on secured loans than unsecured loans
OneMain Financial Read Our Review

Click “Check Rates” to apply to OneMain Financial

Information provided above for unsecured loans – secured loan terms may vary.


LightStream: LightStream, a division of Suntrust Bank, offers secured-auto loans, but only to borrowers with credit scores of 660 and above. APRs with Lightstream range from 3.84% to 17.49%, depending upon the borrower’s creditworthiness, and loan amounts can be anywhere from $5,000 to $100,000 with terms from two to seven years.

LightStream

APRs: 4.99% – 16.99% with AutoPay
Loan Terms: 24 to 84 months
Loan Amount: $5,000 – $100,000
Fees: None
Minimum Credit Score: 660+
Time to Funding: As early as same day
Secured Loans: Offers secured auto loans, but all other vehicle loans (for boats, RVs, etc.) are unsecured
LightStream Read Our Review

Click “Check Rates” to apply to LightStream

Information provided above for unsecured loans – secured loan terms may vary.

Secured vs. Unsecured Loans

If you have a choice between a secured or unsecured loan, you might be wondering why to opt for one instead of the other. To help you gain a better understanding of their differences, here’s what distinguishes each of these types of loans.

  • Features of Unsecured Loans

    • Most common type of consumer loan
    • Solely based on a borrower’s creditworthiness and their ability to repay on time
    • Starting APRs are often higher compared to secured loans
    • Great for borrowers with good credit who don’t want to risk losing an asset
    • Your credit record will suffer if you skip a payment or stop making them altogether

» MORE: Compare Unsecured Personal Loans

  • Features of Secured Loans

    • Less common than unsecured loans
    • Best for borrowers who don’t qualify for unsecured personal loans
    • Loans can be secured with cars, savings accounts, or certificates of deposit
    • Starting APRs may be lower than that of similar unsecured loans
    • Secured loans are considered risky because you could lose your car
    • The lender can seize your collateral without taking you to court if you default

What Can You Use to Secure a Personal Loan?

Different financial institutions have different policies regarding what they’ll accept as a form of collateral. Generally speaking, though, here are three items of you could use to secure your loan:

  • Your vehicle. When it comes to secured loans, vehicles are, by and large, the most common asset borrowers use to obtain the funds they seek. These arrangements are called auto-equity loans, and they allow individuals to borrow money equivalent to the market value of a paid-off car. Borrowers can also often use boats, motorcycles, and recreational vehicles as collateral.

  • Your savings. This scenario may not make sense for everyone, but If you have money in a savings account and don’t want to touch it for whatever reason, you can leverage your nest egg to lock down a loan. This approach can actually be more affordable than getting a personal loan because the interest rates will likely be lower. In many circumstances, however, you won’t have access to your savings account until the entirety of the loan is repaid.
  • Your investments. Certificates of deposit (CDs) and other financial investments are also popular sources of collateral for secured loans. If you’re an active investor or have inherited some CDs that are just sitting there, using your holdings to secure a loan could be an appealing option.

Conclusion

Now that you know how to get a secured bad credit personal loan, spend some more time learning more about today’s leading lenders or apply now to the institution you think will give you the best terms.  

Check Rates

ADVERTISER DISCLOSURE
The offers that appear on this site are from third party advertisers from which PrimeRates receives compensation. This compensation may impact how and where products appear on this site (including, for example, the order in which they appear). PrimeRates strives to provide a wide array of offers, but our offers do not represent all financial services companies or products.