Best Secured Personal Loans in December 2024

• We researched the best lenders for secured loans and found Best Egg, OneMain Financial, and Upgrade to be the top picks. Best Egg offers high close rates for pre-approved borrowers, OneMain Financial is best for borrowers with bad credit (no minimum credit score required if you apply directly through the lender), and Upgrade is a great choice for fair-credit borrowers looking for same-day funding. 

For borrowers with near-prime credit scores (601 to 660), median personal loan interest rates hovered around 25% APR from 2018 through 2023, according to TransUnion, reaching 26.9% by the first quarter of 2024.

If those borrowers had looked into a secured loan instead—which relies on collateral like a car or savings account to secure the loan—some might have been able to lower their APR or borrow more. And applicants who got rejected may have been approved.

If you're considering a personal loan, learn how secured loans work and how they compare to unsecured personal loans to determine which is best for you.

Best secured personal loans 

Navy Federal: Best for military

Navy Federal Credit Union is open to members of the armed forces and Department of Defense personnel, along with their family and household members. It offers loans secured by both savings accounts and certificates of deposit held with Navy Federal.

The rates for savings secured loans sit at the share rate plus 2% for terms up to 60 months and plus 3% for terms up to 180 months. Certificate secured loans are available in terms up to 60 months, at a rate of the certificate rate plus 2%.

What is a secured personal loan?

A secured loan gives the lender rights to a valuable asset it can sell if you don't repay what you owe. Mortgages and auto loans are examples of secured loans that use your home and vehicle as collateral, respectively.

Much like their unsecured counterparts, secured personal loans can be used for almost anything, from vacations to home improvements to debt consolidation. You'll need to pledge collateral though, which on a secured personal loan can take various forms, such as a vehicle, savings account, or certificate of deposit. Best Egg will even accept the fixtures in your home.

How does a secured loan work?

When you take out a secured loan, you give the lender permission to record a lien on the asset you offer as collateral. This lien gives the lender the right to take your asset and sell it if you miss payments. It also tells other lenders that you've already used this asset as collateral.

For example, say you borrow $5,000 and secure the loan with your car. A few years into your loan, you lose your job. You've paid down the balance to $2,000, but you can't pay any more. The lender could seize your car and sell it at auction to get its $2,000 back. But even if the lender recoups what you owe, you would lose the asset and your credit score would take a hit.

Related: How Do Personal Loans Work?

Repossession

If a lender seizes your asset to sell, you could still be on the hook for additional payment. Continuing the example above, let's say the car sells for $1,500. After late fees, additional interest and auction fees, you owe the lender $2,400, not $2,000. Since it only recouped $1,500 of that amount, you could be billed for the remaining $900.

On the other hand, if your car sells for say, $4,500, the lender should send you a check for the difference of $2,100 between the sale price and what you owed.

Secured vs. unsecured personal loans

It's important to understand the differences between secured vs. unsecured loans when you're shopping around. A secured personal loan requires you to pledge an asset, like a savings account or vehicle, that the lender can take if you don't repay the loan. An unsecured loan doesn't.

You may want to apply for a secured loan if you were approved for an unsecured loan but the amount was too low or the APR was too high. A secured loan can also be a good choice when you can't qualify for an unsecured loan.

Where can I get a secured loan?

If you're wondering where to get a secured loan, check out banks, credit unions, and online lenders. Be sure to shop around, because offerings vary. 

Terms often range between two to eight years; interest rates could be as low as 2.25% and as high as 35.99%, depending on the lender and the type of collateral. Origination fees can range from 0% to 9.99% or more, depending on the lender, your loan amount, and credit profile.

What can I use as collateral for a secured loan?

Any valuable asset can be used as collateral if you can find a willing lender.

Banks, credit unions, and online lenders often accept vehicles, such as cars, trucks, motorcycles, boats, recreational vehicles (RVs), or trailers. The vehicle must be paid off, titled in your name, and worth at least as much as you want to borrow.

An acceptable financial asset could be a savings account, money market account, certificate of deposit, investment account, or cryptocurrency. You won't be able to withdraw assets from your account while it's securing your loan balance.

Through secured personal loans from specialty lenders, you may have additional collateral options, including fine art, collectibles, jewelry, diamonds, and gold bullion.

Connect with several lenders, as collateral options vary.

Pros and cons of secured personal loans

Is a secured loan a good idea? Compare the pros and cons, then decide for yourself.

Pros

1. Chance for lower rates: Collateral means less risk for the lender and could mean a lower interest rate for you.
2. Could mean larger loans: The more valuable your collateral, the more you may be able to borrow.
3. Opportunity to build credit: Timely payments can build your credit history and score.

Cons

1. Risk of loss: The lender can take your pledged assets if you don't repay your loan.
2. Limits on collateral usage: If your collateral is a financial asset, you'll lose access to the portion that secures your loan. The lender will gradually release it as you make payments. If you're in the military, you can't use your vehicle as collateral.
3. Few online lenders offer secured personal loans: Aside from a handful of mainstream lenders, your best bet to find a secured personal loan may be through a local credit union.

Alternatives to secured personal loans

Knowing your alternatives can help you decide whether a secured personal loan is right for you. Think about whether one of the options below would be a better fit.

• Unsecured personal loan: This allows you to avoid the risk of pledging collateral, though you'll likely need a good or better credit score (a FICO score of 670 or higher) and your rate may be higher than on a secured loan (even with good credit).
• Credit card: Borrow as needed instead of taking a lump sum. Repayment is open-ended, offering more flexibility but potentially costing much more in interest. Secured credit cards are also available. These often require that you pledge a savings account or security deposit at the same bank as collateral.
• Use a co-borrower or a cosigner: A cosigner or a co-borrower with strong credit could enable you to borrow more, get a lower rate, or avoid pledging collateral. A cosigner does not have access to the funds, and is only pursued for payments if you miss them. A co-borrower, which is a much more common option, shares access to the loan proceeds and makes loan payments jointly with you.
• Home equity loan or line of credit: You may be able to pledge your home as collateral and borrow against part of its value if you have enough equity. While you could face foreclosure if you can't make payments, these loans tend to come with lower rates and higher limits than personal loans, with repayment terms up to 30 years.
• Sell something: You could raise money while ridding your home of unwanted possessions.
• Pay cash: Create a savings plan and budget if your goal is a nonessential purchase, or not immediate. Put money away as you can with a specific goal in mind.