Best Secured Personal Loans for April 2024

The Bottom Line

The best secured personal loan for you depends on your needs. Upgrade is our top choice because of its loan limits and the easy application process. Keep in mind that you can only put up a passenger car as collateral if you don't qualify for an unsecured loan.

OneMain is an option if you’re struggling to get approved with other lenders due to bad credit. Credit unions like Patelco provide the lowest possible rates. If you're a homeowner, Best Egg lets you pledge home fixtures as collateral. But if you want to borrow against a large savings account or investment portfolio, First Tech Federal Credit Union is the better choice. 

Guide to Choosing the Best Secured Personal Loan

What Is a Secured Personal Loan? 

A secured personal loan is a term loan backed by an asset that belongs to the borrower, such as a vehicle or savings account. When you apply for a secured loan, the lender assesses the value of your proposed collateral alongside factors like your credit, income, and debt. 

If you get approved and agree to the loan contract, you’ll receive the loan and must pay it back, plus interest, over a set term. As long as you make the required payments on time, you’ll keep your collateral. However, if you miss payments and the loan goes into default, the lender can seize your collateral and sell it to recover the amount you owe.

What's the Difference Between Secured and Unsecured Personal Loans?

The main difference between secured and unsecured personal loans is that borrowers pledge collateral to get secured loans. The collateral acts as security for the loan—meaning the lender can seize and sell it if you don’t make your payments on time. As a result, secured loans often come with more flexible eligibility requirements, lower APRs, longer loan terms, and higher loan amounts than unsecured loans. 

While unsecured personal loan lenders can’t directly seize anything you own if you default, they can take you to court. If they sue you and win, the court can issue a judgment saying you owe the amount and allow your lender to seize your assets, such as your bank account or wages.

Where Can You Get a Secured Personal Loan?

You can get a secured personal loan from a variety of lenders, including banks, credit unions, and online lenders. As you’re reviewing secured loan products, compare the following factors:

• Loan amounts: Each lender offers a range of loan amounts. Check the minimum and maximum limits.
• APRs: The APR tells you how much you’ll pay in interest per year. Look for APR ranges with low minimum and maximum limits.
• Origination fees: Many lenders charge origination fees that can range up to 10% or more of the loan amount. Look for no or low fees.
• Term length: Check the loan terms lenders offer. Longer terms allow for lower monthly payments but result in higher overall costs.
• Affordability: Does the monthly payment fit in your budget and is the overall cost competitive? Assess each loan’s affordability.
• Collateral options: Check for the types of allowable collateral to see if they suit your situation.
• Collateral restrictions: Lenders may place certain restrictions on the collateral you can pledge (e.g., age limits on vehicles, insurance requirements, etc.)

How to Qualify and Apply for a Personal Loan

Lenders review several factors before you can be approved for a loan. Keep in mind that some factors carry more weight and importance than others. Here are a few of the most common things that lenders consider from potential borrowers:

• Your age: Lenders cannot discriminate based on age. However, some states require that borrowers meet minimum age requirements before they can enter a legal financial contract with a financial lender.
• Legal residency: Just like age, lenders can't turn you down because of your national origin. They may ask you about your residency status to determine whether you can pay back the loan. Keep in mind that non-residents and non-citizens may still qualify, but it may be tougher to be approved.
• Income: Almost all lenders ask you for your income and employment information. This is to ensure that your source of income is enough to repay the loan. Some companies may have an income threshold before you can borrow.
• Debt-to-income (DTI) ratio: This ratio represents how much of your income goes to pay off your debts every month. As such, it helps lenders see how much of a risk you are if they approve you for a loan.
• Credit history and score: The majority of lenders use your credit history and credit score to qualify you for a loan. Although these factors don't make or break the decision, they may also influence your loan terms, amount, and interest rate.

Before starting the process of getting a personal loan, it can be helpful to check your credit to see where you stand. From there, request quotes from multiple lenders. Most invite you to fill out a quick form on their website and find out within minutes if you pre-qualify. 

1. Get pre-qualified: Lenders typically ask about your desired loan size, income, and living situation and run a soft credit check to determine if you’re likely to qualify. This kind of credit check does not impact your credit score.
2. Review loan offers: Upon pre-qualification, lenders often present you with a quote that includes the estimated loan amount, APR, and term available to you. It’s best to compare at least three offers if you can.
3. Complete a loan application: Once you find the best fit, you’ll need to complete the full application. At this point, lenders may request documents to verify the information you’ve provided (e.g., pay stubs, tax returns, etc.). Additionally, they’ll run a hard credit check.
4. Get funded: If all goes well, you’ll be approved and will receive a loan contract. Once you sign it and send it back, the lender will get to work on sending the loan funds to you—often within a few business days.

Alternatives to Secured Personal Loans 

Secured personal loans aren’t your only option. Here are a few alternatives to consider if a secured loan doesn’t sound right for you:

• Other secured loans: If you’re looking to purchase a specific item like a car, appliance, or mattress, you can look into secured loans for that item. Many retailers offer in-house financing or work with networks of partner lenders. 
• Home equity loans: If you’re a homeowner with equity, you could also consider a home equity loan or home equity line of credit (HELOC). Both come with many of the benefits of secured personal loans like low APRs and large loan amounts. However, they do require you to allow a second lien on your home. 
• Buy now, pay later (BNPL) services: BNPL service providers like Affirm and Earnin enable you to split up the cost of retail purchases over time. While these are unsecured loans, providers tend to have more lenient eligibility requirements than most personal loan lenders.
  

Why You Should Trust Us

Investopedia collected and analyzed hundreds of key data points from over 70 companies across three months to identify the most important factors for readers choosing a fair loan lending company.

We used this data to review each company for fees, repayment terms, income requirements, and other features to provide unbiased, comprehensive reviews to ensure our readers make the right decision for their needs. Investopedia launched in 1999 and has been helping readers find the best loans for those with fair credit since 2020.

How We Pick the Best Secured Personal Loans

To evaluate and rank personal loan providers we collected hundreds of data points across 70 lenders, including traditional banks, credit unions, fintechs, and special interest finance companies. We researched and evaluated APRs, loan amounts and terms, fees, customer experience, and much more.

To rank the lenders in our database and to generate star ratings, we weighted the data we collected, based in part on what consumers told us were the most important features of a personal loan and lender in a survey we conducted. We grouped those factors into four broad areas:

• Loan costs (advertised APR, fees, and six other factors): 29.25%
• Loan terms (loan amount, repayment term, and three other factors): 22.25%
• Borrowing requirements (credit score, membership requirement, and six other factors): 28.5%
• Additional features (online application, pre-qualification, and eight other factors): 20%

Learn more about how we evaluated personal loans in our complete methodology.

Guide to Personal Loans

Learn more about personal loans:

• What is a personal loan?: A personal loan is an installment loan that can help you cover different personal expenses. Loans can be secured or unsecured, and are taken through banks, credit unions, and other financial institutions.
• How do personal loans work?: When you take out a personal loan, your lender deposits the proceeds as a lump sum in your account. Most lenders require that you pay your loan back in regular installments, usually monthly, plus interest.
• When are personal loans a good idea?: You can use a personal loan for any purpose, including debt consolidation, to buy a new car, or to take a vacation. But before you apply, make sure you can repay the loan to ensure you don't damage your credit.
• How to get a personal loan: There are several steps to getting a personal loan. Do your research on lenders and rates and see if you pre-qualify. Make a formal application (if necessary) and sign your loan documents when you're approved. After you receive your funds, begin repaying your loan.
• How to apply for a personal loan: Applying for a personal loan is fairly easy. Before you apply, though, review your finances and decide how much you need and can afford to borrow. Review the lenders that are available to you, see if you pre-qualify, and submit your application online or in person.
• How to use a personal loan: You can use a personal loan for any reason. Personal loans are helpful when you want to consolidate debt, make home improvements, cover emergencies, or make large purchases.
• Where to get a personal loan: You can apply for and get a personal loan from a bank or credit union. You may also want to consider other financial institutions and online lenders. Requirements and interest rates vary based on the lender you choose.
• Personal loans vs. credit cards: Personal loans are installment loans that usually come with fixed rates and can only be used once. Credit cards have revolving credit lines, which means you can use them more than once, and require at least a minimum payment.
• Alternatives to personal loans: Some of the common alternatives to personal loans include credit cards, lines of credit, payday loans, and retirement loans among others.
• Personal loan calculator: A personal loan calculator can help you figure out your loan payments and overall costs before you apply.
• Personal loans methodology: Review our methodology to see how we came up with our lists of best personal loans.