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How To Get a Secured Personal Loan

Start Your Engine: Secured Personal Loans

Personal loans come in all shapes and sizes and can be used for a wide variety of reasons. And by reasons we mean everything from planning your first getaway to having a little extra cash on hand to finance your first car.

But it’s tricky to get credit if you don’t have credit in the first place. What’s an aspiring Vin Diesel to do when they need a new car to save the world and the money’s tight?

Not everyone can afford to live life “a quarter-mile at a time” (sorry, Vin). Sometimes you need a little fuel to power your progress. And that’s where secured personal loans come in.

What Is a Secured Personal Loan: Find Out

Secured personal loans are guaranteed by the promise of collateral. These types of assets – a savings account, a car or a certificate of deposit – are usually equivalent to the value of the personal loan being approved.

What is an unsecured vs. a secured personal loan?

An unsecured personal loan doesn’t require any collateral. A secured personal loan requires collateral.

It’s that simple.

Is it easier to qualify for a secured personal loan?

Yes! Because the lender uses your property or assets to guarantee the personal loan, this type of loan is vastly easier to get prequalified and approved for.

What Can I Use a Secured Personal Loan For?

Your only limit is your imagination, friend! Okay, okay…there are SOME limits (mainly to do with collateral, which is the value of the asset you promise against the loan).

Some of the things you can use it for include:

  • Financing a car
  • Paying medical bills
  • Updating your work wardrobe
  • And more!

Just remember that you can only take the value of what you have to use against the amount you want.

What Can Be Used As Collateral for a Personal Loan: The List

Pretty much anything that is equal to or greater than the value of the loan amount can be used as collateral. Here is a list of the usual things lenders will accept:

  • Cars
  • Boats
  • RVs
  • Trailers
  • Cash in a savings account
  • Investments
  • Future paychecks
  • Real estate
  • Art
  • Jewelry
  • Collectibles (e.g., coins)

You’ll want to check what’s accepted before you apply for a secured personal loan.

How much collateral is needed for a personal loan which is secured?

You’ll need at LEAST the amount that you’re trying to take out.

For example, a $3,000 loan will need $3,000 worth of collateral. This may include fees, such as origination fees (the fees that make the lender profit on the loan).

Are interest rates lower with a secured personal loan?

One of the nice things about applying for a loan that asks for security is that, on the whole, interest rates tend to be lower. This means that you’ll save a bit of money and be able to better manage your budget.

What happens after you apply?

After getting a secured personal loan, you’ll need to be aware of the following:

  • How much you took out
  • The time you have to pay it back
  • When you have to begin your monthly payments (typically a date set by the bank, but you can change it if you have to)

You’ll also need to know your interest rate and any potential prepayment penalties or fees when you review the promissory note for the personal loan.

Keep these documents handy. You may need them when applying for other types of credit, like applying for a mortgage for your dream home.

Is a Secured Personal Loan a Good Idea: Pros and Cons

Secured personal loans have a couple of different features that make them different from other forms of credit.

You’ll want to weigh the pros and cons – but what are they?

Don’t worry, fam. We got you:

Pros of Secured Personal LoansCons of Secured Personal Loans
Helps you improve your credit: If you’re new to credit or have a few dings, a secured personal loan can be the way to get your credit on track or back on trackYou could lose it all: If you fall behind on payments or you default, you’ll end up losing your collateral and tanking your credit score (double whammy)
There are lenders out there for you: You’ve got your choice of lenders who offer credit options that require you to put up securityYou’re limited by your assets: You can only take out what you can afford to guarantee. If you have $5k in cash but want to take out $10k, it’s not happening
Lower comparable interest rates: When you look at the average annual percentage rate for a credit card (which is around 14.75%), opting for a secure personal loan is, by far, the cheaper option[1]There are fewer options available than if you took out an unsecured personal loan: You’ll have your choice of lenders, but you’ll have access to fewer lenders than if you had applied for an unsecured personal loan

Places To Get a Secured Personal Loan: Where To Go

You may be wondering where you can get a secured personal loan. Well, that’s what we’re here to tell you.

The three main places are banks, online lenders and credit unions.


The advantage of taking out a loan with a bank is that, if it’s your bank, you’re already banking with them for other services, so you’re a safer bet.

The bank may be able to provide special interest rates or discounts that you might not find anywhere else.

Online lenders

Online lenders have the advantage of meeting you where you’re at: online.

Usually, all the paperwork is online, too. And that saves time and trees.

Credit unions

Credit unions have a good reputation for handing out personal loans at reasonable rates if you’re a member. It’s worth checking them out as an option.

Secured Personal Loan: Glad to be your “ride or die”

We’ve reached the finish line! Now that you know everything you need to know about getting a secured personal loan, go get that new car and save the world!

The Short Version

  • A secured personal loan requires assets that are equal to or exceed the value of what you want to take out
  • One of the benefits of taking out a secured personal loan is enjoying lower interest rates
  • Make sure you make your payments on time to avoid your credit score getting trashed
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  1. Federal Reserve System. “Consumer Credit – G.19.” Retrieved December 2021 from

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