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Secured personal loans are simply loans backed by collateral, such as a car or bank account. By pledging something of value, you could more easily qualify for a loan or get a more competitive interest rate. But these loans may also be risky for some borrowers — if you fail to pay back the money you borrow, you lose the collateral to your lender.
Learn more about our top secured personal loan picks today and all the details you should know before you apply.
First Tech Federal Credit Union: Best overall
Our take: First Tech Federal Credit Union offers personal loans you can secure with either your savings account or a share certificate. There are no fees, flexible loan terms, and you can access your funds quickly.
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Loan amount: $500-$500,000
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Repayment terms: Up to 96 months
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Funding speed: Same-day funding possible, but may take up to 2 or 3 days
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Origination fee: None
Secured loans from First Tech Federal Credit Union are secured by either your savings account balance or share certificate with the credit union. You won’t have to pay any origination fees when you take on either of these secured loans, and there’s no penalty for paying back your loan early.
The First Tech savings secured loan charges an APR equal to your savings rate plus as low as 3.00%. For instance, if you have a savings account earning 3.00% interest, you could secure a loan at a rate as low as 6.00% APR. You can borrow a minimum of $500, with loan terms lasting up to 96 months.
For First Tech certificate secured personal loans, the APR is similar. Your APR will be your certificate rate plus as low as 3.00%. If you have a 60-month share certificate with a 3.25% APY, for example, your certificate secured loan rate could be as little as 6.25% APR. For this type of secured loan, you can borrow a minimum of $500, and your loan term can go up to the date your certificate matures.
There are a few ways to meet membership eligibility requirements to join First Tech and take on a secured loan. You can qualify if you work for one of 1,700+ partner tech companies, work for the state of Oregon, live or work in a participating community, are family of a First Tech member, or become a member of a partner organization.
Related: What is a credit union, and how do you join one?
Upgrade: Best for auto-secured loans
Our take: Unlike the others on our list, Upgrade’s secured personal loans use your owned car as collateral. You’ll pay an origination fee for this loan, but you can get funding fast and may be able to secure better terms than with an unsecured loan.
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Loan amount: $1,000-$50,000
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Repayment terms: 24-84 months
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Funding speed: Funds sent within one business day
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Origination fee: 1.85%-9.99% origination fee
When you apply for an Upgrade personal loan, Upgrade may determine that you could have a better chance of qualifying if you use your car as collateral for an auto secured personal loan. To qualify, your car must be owned by you and less than 20 years old, insured, used only as a personal vehicle, registered in your name, and certain other criteria. Other vehicles, such as motorcycles or RVs, aren’t eligible.
You’ll get more details about the specific loan terms (including term length, interest rate, loan amount, and more) when you submit all of your information. Then you can see the specific loans you qualify for with Upgrade.
During the application process, you’ll need to provide some documentation, including your registration and insurance card. You’ll also mail signed limited power of attorney forms to Upgrade to place the lien on your car, and you may need to include your car’s title.
If your loan becomes delinquent, Upgrade can take possession of your car — but you should notify the lender as soon as possible to learn about your options before it gets to that point. Otherwise, you’ll keep possession of your car throughout the loan term, and Upgrade’s name will only appear on your car title until your loan is paid off.
Navy Federal Credit Union: Best low APR
Our take: Navy Federal Credit Union offers two types of secured loans, secured by your savings account or a certificate of deposit. Of the options we evaluated, Navy Federal secured loans have the lowest potential APRs, along with other competitive features.
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Loan amount: $250-$50,000 (potentially more for certain purposes)
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Repayment terms: up to 60 months; 61-180 months for certain loan purposes (certificate-secured loan term must be equal to or less than certificate term)
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Funding speed: Same-day funding possible
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Origination fee: None
Navy Federal offers both savings-secured personal loans and certificate-secured personal loans. To apply for either, you’ll need to call the credit union or go into a branch — but you won’t have to undergo a credit check.
Savings-secured loans are backed by a Navy Federal savings account, with interest rates equal to your savings share rate plus 2.00%. For example, Navy Federal share savings accounts today offer 0.25% APY — which means your secured loan would have an APR of 2.25%. While you pay back the loan, your savings remain in your account and continue to earn dividends. As you pay back what you borrowed, you’ll see your available balance in your savings account start to go back up.
Certificate-secured loans are similarly secured by the amount in your Navy Federal share certificate. For this type of loan, you can’t borrow more than the amount in your share certificate, and the loan term can only be as long as the certificate term. You can take on a loan for up to 60 months at an interest rate equal to your certificate rate plus 2.00%. So if you currently have a 3-year share certificate with a 3.60% APY, your certificate secured loan would have a 5.60% APR.
You’ll need to be a Navy Federal Credit Union member to qualify for either of these loans. Membership is open to active duty, retired, or veteran members of the military; their immediate families; and civilians working for the Department of Defense.
What is a secured personal loan?
A secured personal loan allows you to borrow money and pay it back over a fixed term, like any personal loan. The difference is that secured loans are backed by collateral you put down up front, like an automobile, savings account, investments, or even home fixtures.
With your collateral as security, personal loan lenders may be more likely to extend you a loan when they wouldn’t otherwise, or offer you a lower interest rate than you could qualify for on your own. If you don’t pay back what you borrow, the lender can recoup their cost by taking your collateral.
Like other personal loans, you can typically use a secured personal loan for any purpose. The money can be useful for paying down high-interest debt, completing a home improvement project, making a large purchase, and more.
Secured loans are also a way to build credit. You can access the loan without a great credit score to start, and increase your score as you make timely payments in full each month over the loan term.
Should you get a secured personal loan?
A secured loan can be a good option if you need quick access to money and you’d otherwise have to turn to risky alternatives like payday loans. It can also help you develop a positive payment history and increase your credit score.
Always read the fine print of your loan agreement before you borrow. You should be able to afford the monthly payments over your loan term. Depending on the APR you qualify for and any fees you’re charged, you could end up paying much more over the entire lifetime of the loan than you originally borrowed..
Beyond standard loan details like APR and fees, it’s also important to understand the potential consequences of using collateral to secure a loan. For example, if a secured loan requires your vehicle as collateral, you could lose possession of it if you fall behind on payments and default on the loan. If your collateral is a savings account, you could wipe out your savings if you can’t repay. Understand all the risks involved with your secured loan before you accept the loan offer.
Depending on your goal, a secured credit card may be a useful alternative to a secured loan. Secured credit cards require an upfront cash security deposit (often a minimum of around $200), which acts as your credit limit. You can use the card to make purchases and build credit, and when you close your account or upgrade to an unsecured card, you’ll get your deposit back.
Read more: How to get a personal loan with bad credit
How to choose a secured personal loan
Here are some of the most important factors to look for in a secured loan:
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Interest rate: Like any loan, the APR you pay on your secured loan can make a big difference. Secured loan rates are often lower than unsecured personal loan rates, since you must put down collateral to take on the loan. But your interest rate will also depend on your credit history and other factors in your application. The better your credit, the more likely you are to score a lower interest rate. With many lenders, you can prequalify for a loan before applying without any effect on your credit score.
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Loan term: Secured loan term lengths can have a wide range, from as short as 12 months or even less to over 84 months. Look for terms that work for your budget with affordable monthly payments. For specific secured loans, like certificate secured loans, your loan term may also be limited by your CD or share certificate’s term length.
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Other fees: Secured loans may have fees that increase your overall loan cost. Like any loan, your lender may charge an origination fee at the start of your loan term. For secured loans, look out for potential fees related to the appraisal of your collateral or title transfer fees when your collateral is a vehicle.
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Collateral requirements: The collateral required varies a lot depending on the lender and type of secured loan you choose. Savings accounts and CDs are common forms of collateral, but you can also secure your loan with your car, other types of vehicles, investments, home fixtures, and more. Read the fine print of any secured loan to find out about any limitations. For example, auto-secured loans generally require you to own your vehicle outright before you can use it as security on a new loan.
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Funding speed: With most secured loans, you can access your funds quickly — after you’ve been approved and your collateral is verified. Be sure to account for the application and verification process if you’re applying for a loan you need quickly. Once the lender does approve your loan though, many offer funding within one to three days, or even on the same business day.
Our methodology
To find the best secured personal loans, we started with a list of secured loans available from national banks, online banks, credit unions, and other financial institutions available today. Secured loans are generally less common than other loan types, but we focused on banks and credit unions available to a wide range of people, not just certain regions. You may find more secured loan options from your local credit unions and regional banks.
We scored these lenders using eight categories, evaluating details like APR, fees, collateral flexibility, loan terms, funding speed, and more. We also looked at broader factors such as customer service channels, reviews from existing customers, and how simple (or not) the application process is.
We weigh these ratings based on each category’s relative importance relating to consumer-friendly secured loans and our own expert editorial opinions.