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Secured car loans

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Use your car as collateral and benefit from lower interest rates.

Have you been thinking about financing a car but was worried about how much it could cost you? If you have poor credit preventing you from getting good interest rates on loans, a secured loan could help. Using your new or used car as collateral can lock in lower rates, giving you lower monthly payments. The risk? If you default, you could lose your car.

Find out what you need to know about secured car loans in this guide. Car Loans

Our top pick: Car Loans

Get matched with a local car dealership to finance your car purchase. Bad credit, no credit OK.

  • Specializing in 'buy here, pay here' car loans. No banks or credit unions.
  • Typically hear back from a rep within 24 hours.
  • Free loan-matching service. No obligation offers.

    How does a secured car loan work?

    A secured car loan typically has competitive interest rates and allows a buyer to use the car as security for the loan. This appeals to the lender because it can repossess the vehicle if the buyer defaults — alleviating risk. With less risk come lower interest rates.

    The car can be new or used — in good condition — and the rates offered for a secured car loan can be fixed or variable.

    Compare car loans

    Rates last updated September 21st, 2018

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    Unfortunately, none of the personal loan providers offer loans for that credit score. If you are in urgent need of a small loan, you might want to consider a short term loan.
    Name Product Product Description Minimum Credit Score Term of Loan Requirements Car Loans
    Apply with a simple online application to get paired with a local auto lender. No credit and bad credit accepted.
    Varies by lender
    Must be a US citizen with a current US address and employed full-time or have guaranteed fixed income.
    Auto Credit Express Car Loans
    Get connected with an auto lender near you, even if you have bad credit.
    Typically 3 to 6 years
    Must be employed full-time or have guaranteed fixed income of at least $1,500/month and be a current resident of the US or Canada.
    LendingClub Auto Refinancing
    Lower your monthly car payments and save on interest through a fast and easy online application process.
    Fair or poor credit
    Minimum of 2 years
    Car must be less than 10 years old with fewer than 120,000 miles. Current loan must have a balance between $5,000 and $55,000 and at least 24 months left in its term.
    MotoRefi Car Loan Refinancing
    A car loan connection service for borrowers looking to refinance.
    1–6 years
    Must have an income of at least $2,000/month and have a vehicle with less than 100,000 miles. Car Loans
    Get up to four offers in minutes through one simple application. Multiple financing types available including new cars, used cars and refinancing.
    24 to 84 months
    Must have a Social Security number; make $24,000+/year; have no open bankruptcies.
    LendingTree Auto Loans
    Compare multiple financing options for auto refinance, new car purchase, used car purchase and lease buy out.
    Typically 1 to 7 years
    Must be a US citizen and 18+ years old. Must have good to excellent credit.
    Capital One Auto Financing
    You could qualify for a car loan of up to 40000, but not all dealers accept this bank's financing.
    Good to excellent credit
    36 to 72 months
    Valid street address; existing Capital One accounts in good standing. Car must be a 2006 model or newer with less than 120,000 miles.
    Wells Fargo Auto Loans
    Auto loans with high loan amounts to cover your car purchase or refinancing needs.
    Good to excellent credit
    1 to 6 years
    Your income and assets must support your existing debt obligations and the desired loan amount.

    Compare up to 4 providers

    How are secured car loans different from unsecured loans?

    There are several key differences between these two types of loans:

    • Loan amount flexibility. Secured loan will only cover the amount of the car. Unsecured loans can be more, giving you the option to use the loan however you choose.
    • Vehicle requirements. Secured car loans often have different guidelines regarding the age and condition of the car. However, unsecured loans can be used to purchase any type of car.
    • Interest rates. Rates for secured car loans can be more competitive than unsecured loans, especially if you have little or poor credit.
    • What happens if you default. The lender can repossess and sell your vehicle to recoup its losses. If you default on an unsecured loan the lender has no rights to your vehicle.

    Fixed vs. variable rate secured car loans

    Secured car loans can come with either fixed or variable interest rates and it’s important to select the option that best meets your needs.

    Let’s look at the difference between them:

    Fixed interest rateVariable interest rate

    • Interest rate remains fixed for the duration of the loan
    • Knowing your payments each month helps you budget


    • Additional repayments or repaying the loan early can be subject to a penalty fee
    • You may be limited to how many additional repayments you can make per year
    • If interest rates lower in the market, you can’t cash in on those savings

    • Interest rates have potential to drop with the market
    • Repaying the loan early and making additional repayments is typically allowed


    • Interest rate may fluctuate throughout the loan term
    • Budgeting can be difficult if interest rates begin to soar

    How to compare different secured car loans

    Finding the best secured car loan depends on things like your financial situation and the length of the loan. When shopping around, some other factors you can use to determine the quality of the loan are:

    • Interest rate and total cost of the loan. The interest rate determines what your repayments are over the loan term. When comparing loans, add the interest and any other fees to get the total cost.
    • Fees. These can include one-time origination fees and monthly loan service fees.
    • Loan term. Lenders set specific loan terms to choose from. Terms are usually between one and five for fixed rate loans and one and seven years for variable rate loans. Make sure the lender lets you repay the loan in a period suitable to your budget.
    • Additional payments. Some lenders offer the ability to make additional payments, while others charge a fee if the loan is paid out earlier than expected. Apply for a loan without these penalties if you think you’ll be paying your debt off early.
    • Other features. Lenders offer tools to help you manage your loans like discounts for using autopay. Shop around to find features that can be beneficial to your loan.

    How much can I borrow?

    Secured car loans only cover the cost of the car you’re buying. The bank or lender may offer you preapproval for a certain amount to give you a ballpark figure of what you can spend on a car.

    Whether or not you’re able to include additional upfront costs such as insurance and registration in the loan amount will depend on the lender and how much you’ve been approved for.

    Pros and cons of secured car loans

    • Competitive interest rate. Secured loans come with lower interest rates than unsecured loans, helping to keep your payments manageable.
    • The vehicle doesn’t have to be brand new. Some lenders let you use an older vehicle as security for a loan.
    • Restricted loan amount. You’ll only be able to use the loan amount to purchase the vehicle.
    • Risking your vehicle. If you default on your loan you’ll lose your car, so it’s important to only take on a loan you can afford.

    Not sure if a secured car loan is right for you?

    There are many different types of car loans and some may be better for you than others. Compare the fixed rate personal loan alternatives below.

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