Best secured personal loans of 2023

Compare our top 5 secured personal loans picks

OneMain Financial is a publicly traded finance company with about 1,400 branches in 44 states (all but Alaska, Arkansas, Connecticut, Massachusetts, Rhode Island and Vermont). You can apply for secured personal loans of $1,500 to $20,000 online or at a branch, and collateral can include cars, recreational vehicles (RVs), boats, motorcycles and more. You can usually be approved for a secured loan on the same day that you apply.

Even people with less-than-perfect credit may qualify for financing with OneMain, as it also considers your collateral, income and existing debt levels when evaluating your application. In fact, most of its borrowers are considered nonprime, meaning they have credit issues that might make it difficult to get approved for personal loans with many other lenders.

You can make loan payments online, with OneMain’s mobile app, by phone, in a branch or via mail. Plus, its free PayNearMe service allows you to make cash payments at participating retailers, including some CVS, 7-Eleven, Walmart and Family Dollar locations.

Though you must make loan payments at least monthly, you can pay as frequently as you want. You can also sign up for Direct Pay if you would prefer to have your payments made automatically. Keep in mind: OneMain’s rates are relatively high, ranging from 18% to 35.99% APR (as of publication). If you have good credit, you may be able to get better rates elsewhere.

Figure is a fintech company founded in 2018. It’s different from the other lenders on our list in that it offers home equity lines of credit (HELOCs) rather than standard secured loans.

With a Figure HELOC, you can borrow as much as $400,000 over a term as long as 30 years and repay your loan early with no penalty. APRs range from 6.1% to 14.74% (as of publication). With many HELOCs, it can take a couple of weeks or even months to get approved and funded. But if you choose to apply online for a HELOC with Figure, you may get approved within five minutes and funded in as few as five days. Since your home is offered as collateral, the maximum loan amount is much higher than the other loans on our list.

Unlike other HELOCs that require in-person home appraisals, Figure’s valuation process is completed entirely online. To qualify, you’ll need a credit score of at least 640 (or 680 for investment properties) and income sufficient to repay your maximum withdrawal amount. For perspective, many lenders consider a debt-to-income (DTI) ratio of 36% to 43% acceptable for a HELOC applicant. You’ll also need equity in your home (many lenders want at least 15% to 20%).

Figure’s HELOCs are a bit different than standard HELOCs, in that borrowers are required to draw 100% of their approved credit limit (minus the origination fee) when they close on the HELOC. But like other HELOCs, borrowers can redraw throughout the draw period, provided they’ve made repayments.

Figure offers HELOCs in 43 states and Washington, D.C. Its HELOCs are currently not available in Delaware, Hawaii, Kentucky, Maryland, New York, Texas or West Virginia.

Navy Federal Credit Union was founded in 1933 and is a not-for-profit credit union serving military personnel, U.S. Department of Defense employees, veterans and their eligible family members. Its members have access to a full suite of banking and lending products, including secured personal loans.

You can apply for one of Navy Federal’s secured personal loans by calling or visiting one of its 350 worldwide branches. There aren’t origination fees or prepayment penalties with these loans. Plus, same-day funding is usually available. Money held in a savings or certificate account with Navy Federal will be used as collateral for a secured loan, and the loan amount is limited to the deposit amount you have available to pledge.

Repayment terms can extend for as long as 15 years. However, terms greater than five years are only offered for loans of at least $25,000, and funds from those long-term loans must be used to do things like make home improvements or buy long-lived assets (e.g., airplanes, RVs, land or boats).

You can expect to receive an APR of 2% to 3% above the annual percentage yield (APY) for your deposit account used as collateral. For example, 2% above a certificate APY of 4.20% would result in a secured loan APR of 6.20%. This structure can result in a much lower APR than the APR you would get for other secured personal loan options.

Upgrade is a fintech company that provides affordable access to personal loans and other financial products via partnerships with banks and other financial institutions. The company is licensed in 30 states. It offers unsecured and secured personal loans up to $50,000 with 24- to 84-month terms. Your car will be used as collateral for a secured loan. APRs range from 8.49% to 35.99% (as of publication).

It only takes minutes to see if you qualify for a personal loan from Upgrade. The company uses a soft credit check to pre-qualify you, so there’s no impact on your credit score if you just want to check your rate and approval prospects. This is a particularly helpful feature for those with bad credit. A hard credit check will only be performed once your loan is funded.

You can expect to receive loan proceeds (less an origination fee of 1.85% to 9.99%) within about a day after Upgrade approves your application and verifies any required documents. Funds from an Upgrade loan can generally be used at your discretion, but they cannot be used for post-secondary schooling costs or investments.

If you want to pay the loan back early, you can do so at any time without paying a fee.

Best Egg is a fintech company that partners with banks and other financial institutions to offer personal loans in all but three states (Iowa, Vermont and West Virginia) and Washington, D.C. You can get secured or unsecured personal loans up to $50,000 with terms up to 84 months. Your home’s fixtures — such as built-in cabinets, bathroom vanities and lighting fixtures — are used as collateral for a Best Egg secured loan. APRs on secured loans range from 5.99% to 29.99% (as of publication).

You can pre-qualify online with no impact on your credit (a soft credit check is used) and receive an offer in minutes. The company uses multiple factors to determine your rate, such as your credit score, income and existing debt. Its lowest rates are reserved for individuals with a FICO score of at least 700 and at least $100,000 in annual income.

After accepting a loan offer, you may need to provide additional documentation, such as pay stubs, to verify your application. Once the verification is complete, loan proceeds will be sent to your bank account in about one to three days, less an origination fee of up to 8.99%. You can also use Best Egg’s Direct Pay feature to pay off your credit cards directly and quickly with your loan funds.

You can use your Best Egg personal loan for most purposes, except for things like investing or paying for post-secondary education. You can also get more than one personal loan from Best Egg, as long as your total Best Egg loan balances don’t exceed $100,000.

You can pay off a Best Egg loan as quickly as you want, as there is no prepayment penalty.

What is a secured personal loan?

A secured personal loan is a type of installment loan that’s backed by collateral, such as a car, house or money held in a bank account. It works just like an unsecured personal loan, but if you don’t repay the loan as agreed, the creditor can take the collateral that secures the loan to repay some or all of what you owe.

You can use secured personal loans for nearly any purpose, like consolidating high-interest debt, repairing or improving your home, paying household or medical bills or covering large expenditures such as weddings. Some lenders let you use secured loan funds for any purpose; others restrict you from using the funds for things like paying for higher education or investing.

Just like unsecured personal loans, you’ll typically repay a secured personal loan in equal installments of principal and interest. The interest rate is commonly fixed for the entire loan term, but some lenders also offer variable rates.

Depending on your lender, you may be able to repay the loan as quickly as you want with no fee. However, some lenders will charge a prepayment penalty if you pay the loan back in full before the scheduled end of its term. No matter what type of loan you choose, carefully read the loan documents so you understand the terms before you go through with it.

Examples of secured personal loans

Secured personal loans primarily vary by the type of collateral you’re pledging to your lender. Collateral with a longer lifespan will typically have a longer maximum repayment term than collateral with a shorter lifespan (e.g., houses versus cars). For this reason, secured personal loans are usually distinguished by the type of collateral that secures them.

Some common examples of secured personal loans include:

When considering a secured loan, it’s important for consumers “to understand they are pledging collateral as a security interest and risk losing the asset should they default on the loan,” warned Josh Miller, the head of consumer acquisition, marketing and product development for KeyBank.

Even so, since secured personal loans are backed by collateral, they typically have better rates, and the qualification requirements are easier to meet than the requirements for unsecured personal loans, adds Miller. They can be good for people with “blemishes on their credit” or who are simply trying to build their credit.

Keep in mind: You must have collateral to use secured personal loans, like cash in a bank account, a car you own or equity in your home. If you don’t have assets to offer as collateral, secured personal loans won’t work for you.

Secured loans to avoid

While secured loans can be a good alternative to other types of financing, they’re not always the best option. You should avoid secured loans that offer very short repayment terms (e.g., measured in days versus months or years) and carry very high interest rates, such as vehicle title loans. When interest rates and fees are really high, it’s easy to get stuck in a cycle of borrowing that’s difficult to escape.

If you’re strapped for cash and need quick funding, it might be tempting to look to secured options like title loans or even pawn shops. However, think carefully before pursuing these arrangements, as you will certainly lose your collateral if you don’t repay the loan as agreed.

» MORE: 11 payday loan alternatives

Pros and cons of secured personal loans

If you’re debating between getting a secured personal loan and an unsecured personal loan, there are several pros and cons to consider.

If you don’t want to use collateral to get a loan or you only need money for a short period of time, an unsecured loan might be better than a secured loan, explains Brian Samelko, a senior product manager at PNC Bank.

With an unsecured loan, a lender doesn’t have to protect its security interest in your assets, so unsecured loans “typically have faster approval times and less required paperwork than secured loans,” said Samelko.

» MORE: Secured vs. unsecured loans

How to choose a secured personal loan

Some factors to consider when shopping for the best secured loan are:

• Accepted collateral: Common examples of collateral that a lender might accept include money in CDs or savings accounts, your home’s equity or even your car.
• Loan amount: You may be able to borrow much more with a secured loan than an unsecured loan since you’re pledging collateral, but this depends on the collateral you have to offer.
• Fees: For a secured loan, a lender might charge application, origination, prepayment and appraisal fees.
• APR: A loan’s APR includes both interest and fees, so it’s very useful for comparing loan offers between lenders.
• Terms: Your repayment term often depends on the type of collateral you offer, as the term is connected to the asset’s lifespan. For example, a CD-secured loan will often have a term that matches when the CD matures. Conversely, you may get a 60-month term if you pledge your car as collateral or up to 30 years if you pledge your home.
• Funding speed: While unsecured loans are often funded much faster than secured loans, some secured lenders also offer very fast funding.

Carefully compare offers between lenders and pay attention to the fine print. Remember that even if the interest rate is lower, your total borrowing costs might be higher depending on the fees you’re charged and the repayment term length.

While longer repayment terms may result in a lower monthly payment, you’ll pay more interest over the life of the loan. You can reduce your total borrowing costs by choosing the shortest term you can afford.

Secured personal loan alternatives

If a secured loan isn’t right for your needs, some alternatives include:

• Unsecured loans: These are often faster to get than secured loans but harder to qualify for. And unsecured loan rates are usually higher. However, some lenders allow a co-signer, which may result in better rates.
• Credit cards: If you can’t qualify for an unsecured credit card, there are secured options. With a secured credit card, you’ll usually pledge cash as collateral. This can be a great way to build credit.
• Personal lines of credit: These work similarly to credit cards, except you may not be able to access the money at a point-of-sale location. Rather, you’ll usually request a draw from your line of credit, and the cash will be deposited into your bank account. Personal lines of credit can be secured or unsecured.

When thinking about the type of financing that’s right for you, consider how you plan to use the funds and how quickly you can pay the money back.

Installment loans are best if you want to borrow a single lump sum and fully repay the money in equal payments over time. Credit cards and lines of credit are better if you want to borrow and repay the money multiple times.

Whatever you choose, make sure you put together a plan for how you’ll pay off the money you borrow. With a credit card or line of credit, interest costs can quickly add up if you aren’t disciplined about making payments above the minimum and repaying your total balance quickly. Personal loans often offer lower interest rates than credit cards, and their predictable payment schedules may allow you to pay less overall.

Methodology

To make our top picks for our list of the best secured personal loans, we collected 24 individual data points from 31 well-known lenders. We then compared them based on various loan features, including:

• Repayment terms: We looked at the loan repayment options, giving preference to those lenders that offer a broader range of terms.
• APRs: We gave more consideration to lenders that offer loans with lower starting APRs.
• Loan amounts: Similar to repayment terms, we favored lenders that offer a wide range of loan amounts.
• Minimum credit scores: Preference was given to lenders that work with borrowers with low credit scores, as well as lenders that evaluate loan applications based on a wide range of factors and not just credit scores.
• Fees: We considered loan fees such as origination, late payment and prepayment fees and gave greater consideration to lenders that charge relatively few fees.

The amount of time it takes for a lender to disburse funds and a lender’s permitted uses of its loan funds were also considered in our evaluations. But the lenders we researched were comparable across the board on those features, so these were not deciding factors for our picks.

Since customer feedback is a critical indicator when evaluating companies, this was an important consideration when selecting our top picks. However, for those companies on our list with no ratings on ConsumerAffairs, there were other variables that made them stand out as good options for debt relief, and we factored those into our decisions.