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Secured personal loans explained

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Lock in a lower rate by guaranteeing your loan with an asset.

Personal loans can help you take the next step towards a vacation, a new car or large purchase – a secured loan especially may be beneficial. Even though these loans are often associated with the purchase of a new vehicle, they can be used for so much more than just cars.

What exactly is a secured personal loan?

A secured personal loan is guaranteed against an asset you own or buy with the loan. You can usually apply for an amount of up to $100,000 for terms up to seven years, although there are lines of credit that can be ongoing.

The collateral can come in the form of a number of different items, including: a car, equity in your home, savings and investment accounts or high-priced items such as jewelry.

Which lenders offer secured personal loans

Many personal loan lenders don’t offer secured personal loans. However, OneMain Financial is one lender that does. Learn more about OneMain Financial and the features of its personal loan offers.

Provider Secured loans Unsecured loans
OneMain Financial Yes Yes
PNC Bank Yes Yes
Mariner Finance Yes Yes
Regions Bank Yes Yes
M&T Bank Yes Yes
Umpqua Bank Yes Yes
Key Bank Yes Yes
Lendvious Yes Yes
Reliable Credit Yes Yes
AmOne Yes Yes
Regional Finance Yes Yes
Borro Yes No
BlockFi Yes No
Avant No Yes
Laurel Road No Yes
LendingClub No Yes
LendingPoint No Yes
MoneyLion No Yes
Payoff No Yes
Prosper No Yes
SoFi No Yes
Upstart No Yes

Is a secured loan the right option for you?

It’s important to determine whether any type of financial product is right for you before you apply. When it comes to secured personal loans, here are some points to keep in mind:

  • You can manage your repayments. If you find yourself unable to repay your secured loan the lender is able to repossess the asset you offered as a guarantee to cover its losses.
  • You have an asset to guarantee or are looking to buy one. Lenders will require that you either be looking to buy an asset with your loan (such as a car or major home renovations) or that you already have an asset that meets its criteria.
  • You meet the requirements set by the lender. Lenders will have requirements for the guaranteed asset, such as its age or value. For instance, if you’re using a vehicle as security, it may need to be under a certain age. If you are using a savings or investment account, you may need to have a certain amount in the account.

Pros and cons of a secured personal loan

  • Lower rate. These loans are less of a risk for the lender and come with lower interest rates.
  • Flexible. Unlike car loans, where you have to purchase the vehicle you’re securing to the loan, you can generally purchase whatever you need to with a secured personal loan as long as the amount doesn’t exceed your secured asset’s value.
  • Can help you get approved. Offering an asset to secure a personal loan can help you get approved for loans you may previously not have been. This is because the loan is deemed less risky for a lender to take on when there is an asset attached to it.
  • Risk your asset. When you take out a secured loan you are “guaranteeing” your loan with it. While this gives you lower rates, it also means you can lose it if you default on the loan.
  • Loan amount tied to your assets value. When you attach your asset to a secured loan, it needs to be valued. This value will then be used to determine the loan amount you are offered.

Compare secured vs. unsecured personal loans

How can you compare secured personal loans?

  • Loan amounts. Find out what loan amounts the lender is offering and if it will match what you’re using the loan for.
  • Loan terms. Generally, loans are available for terms of between one and seven years. Loan terms may only extend up to five years for fixed rate loans or peer-to-peer loans, so make sure you find a loan with terms that meet your needs.
  • Assets you can secure to the loan. Lenders have different requirements when it comes to secured loans. You may not be able to secure the asset you are planning to, so check this before you apply.
  • Fees. Check upfront fees such as application or origination fees as well as ongoing annual or monthly fees. These will add onto your costs for the loan.
  • Interest rate. Compare the rate to other lenders and make sure to check the comparison rate which will give you a better idea of the true cost of the loan.
  • Repayment flexibility. Are you able to repay the loan early without penalty? Can you make additional repayments without being charged? Check this before you apply.

What assets can be used as collateral?

Though criteria varies by lender, the following assets are commonly used for secured personal loans:

  • New car.
    If you’re buying a new car or if you have a car that is less than two years old, you can generally use it as a guarantee for a secured loan. Secured motorcycle and RV loans are also available.
  • Used car.
    Lenders will also let you purchase a used car with a secured loan. Other vehicles such as motorcycles or RVs may also be allowed. The vehicle will generally need to be less than seven years old, although some lenders will accept cars up to 10 years old. Cars may need to be of a certain condition.
  • Equity in your home.
    If you own a mortgaged property, you can draw against any equity you have in the property to finance a purchase. Common uses for home equity loans are home renovations.
  • High-cost assets.
    Some lenders are more flexible with the assets they let you use. If you own expensive jewelry, fine art, precious metals, luxury cars or even some antiques, you can secure it against your loan.
  • Savings account.
    This is a more common type of loan available from some banks and credit unions. How much you have available in your savings account is how much you’re able to borrow. The amount of your savings account works as the security in case you default on the loan.

25+ types of collateral you can use to secure a loan

Is there anything else to consider before applying?

Before applying for any type of secured loan, it’s important to establish whether you can afford the repayments. If you default on the loan, the asset you’ve used as the guarantee can be taken by the lender and sold to cover the loss.

Comparing lenders to find the most competitive options in terms of rates and fees will help you find the right option for your budget and needs, so consider whether you’ve done proper research before submitting your application.

Have more questions about secured personal loans?

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