Best Secured Loans in 2024 | LendingTree (2024)

We chose the loans above based on certain types of collateral. Please note that some of these lenders offer other secured loans that may better suit your needs, depending on the collateral you’re willing to put up.

At their core, secured loans work similarly to any other type of installment loan.

• Make sure you meet the lender’s eligibility requirements. The lender will usually assess the value of the asset that you’re putting up as collateral. It will also review your credit score, credit history, annual income and other credit-related factors.
• If you qualify, the lender will approve you. Once you sign the loan agreement, the lender will place a lien on your collateral. This gives it the right to repossess your collateral if you stop making payments. After all the paperwork is in place, the lender will distribute the loan funds to you.
• You’ll begin to make regular repayments. Installment loans are typically repaid every month, with regular reporting to the credit bureaus.
• Continue making payments until you’ve paid off your loan in full. Then, the lender will remove the lien from your collateral. After the lien has been removed, the lender no longer has the right to take that asset from you.

Just as there are different types of secured loans, there are also different types of assets you can use to secure your debt. Some of the most common forms of collateral are real estate, vehicles, savings accounts and CDs.

Secured loans and riskSecured loans have many benefits, but they also come with some big risks. If you can’t keep up with your loan payments, your lender has the right to repossess your collateral. Choose your collateral carefully, and make sure you can comfortably afford your payments before applying for a secured loan.

Secured loans aren’t as common as unsecured loans, but you may find them by contacting banks, credit unions and online lenders. Each lender will have its unique collateral requirements, but here are a few common types:

• Savings-secured loan: A savings-secured loan uses a savings account as collateral. Your maximum loan amount is usually the same amount of money you have in your account.
• Certificate of deposit (CD) loan: This type of loan uses an existing certificate of deposit as collateral. Your CD must be matured, otherwise you’ll face an early withdrawal penalty and instead of earning interest, you’ll owe interest on the amount you borrow.
• Auto-secured loan: An auto-secured loan uses your car as collateral. In this instance, you transfer your car’s title to the lender, and the lender transfers it back to you once you’ve repaid the loan in full. This isn’t the same as a car title loan (more on that below).
• 401(k) loan: Although not technically a personal loan, you may be able to take out a 401(k) loan if you have an employer-sponsored 401(k) plan. A big benefit here is that the interest you pay goes back into your 401(k). But if you leave your job before you’ve paid off your loan, your remaining balance might be due immediately (or you’ll face an early withdrawal penalty).
• Home equity loan or HELOC: Home equity loans and HELOCs use the equity you’ve built up in your home as collateral. These loans also aren’t personal loans, but they tend to offer large loan amounts at affordable interest rates. However, if you’re unable to repay the loan, the lender can seize your home.

A secured loan may not be the best option for everyone. Not keeping up with your payments can tank your credit score, and to make things worse, you’ll lose your collateral.

You can find both secured and unsecured personal loans on LendingTree’s loan marketplace, so let us do the shopping for you.

1. Decide what collateral you’re willing to put up. Since these secured loans won’t be through your bank or credit union, your collateral will likely be your car. If you have more than one car, decide which one you’re more comfortable risking.

2. Figure out how much you can afford to borrow. It’s never a good idea to miss payments on a loan. But with secured loans, falling behind means you could lose your credit score and your collateral. Use our personal loan calculator to make sure you can fit a loan into your budget.

3. Compare offers with LendingTree. Every lender has its own way of determining rates, so you need to shop around to see which is cheapest for you. With just a few clicks, you could have up to multiple offers from up to five lenders to compare. Checking rates is free, and it doesn’t impact your credit score.

If you have rocky credit, you may want to improve your score before applying to make it more likely the lender will approve you. Here are some tips to make it happen.

• Check your credit scores and reports: Watching your credit score go up can motivate you to stay the course. Check your credit score for free with LendingTree Spring. Also, check your credit report and dispute errors you find. You can get one free copy of your reports each week from AnnualCreditReport.com.
• Lower your debt-to-income ratio: Your debt-to-income (DTI) ratio measures how much of your monthly income goes toward paying down what you already owe. If your DTI ratio is above 35%, consider paying down your current debts before applying for another loan.
• Make future payments on time: Payment history accounts for 35% of your overall FICO score. By making future payments on time, you’ll help grow your score.
• Assess the value of your collateral: How much your collateral is worth often dictates how much you can borrow. Appraising your collateral before applying can help you get a better idea of how big of a loan you might qualify for.

Taking a one-size-fits-all approach to any financial product can be a surefire way to find yourself worse off. Here are some alternatives to secured loans that may better suit your needs.

If you need money now

• Joint loan: A joint loan is a personal loan that you share with another person. Joining forces with someone who has good credit can help you get approved if you don’t qualify for a loan by yourself. However, late payments will impact both of your credit scores.
• Buy now, pay later (BNPL): BNPL apps let you split up retail purchases into payments. The most common plan is Pay in Four. You’ll pay 25% down and pay off your remaining balance over four installments due every two weeks. Beware — because BNPL apps are easy to use, you might end up overspending.

If you need to establish or improve your credit

• Secured credit card: A secured credit card works like a regular credit card, except that you’ll make a cash deposit. This serves as your credit limit. You can borrow against it as needed, up to that deposit amount. After responsible use, the credit card company might give you your deposit back and offer you a traditional card.
• Credit-builder loan: You don’t actually borrow money with a credit-builder loan. Instead, you’ll give the lender a lump sum of money. Then, you’ll make monthly payments to unlock those funds. The lender will report your monthly payments to the credit bureaus, helping you establish credit history.

We reviewed more than 10 lenders to determine the overall best five secured personal loans. To make our list, lenders must offer secured loans with competitive APRs. From there, we prioritize lenders based on the following factors:

• Accessibility: Lenders are ranked higher if their personal loans are available to more people and require fewer conditions. This may include lower credit requirements, wider geographic availability, faster funding and easier and more transparent prequalification and application processes.
• Rates and terms: We prioritize lenders with more competitive fixed rates, fewer fees and greater options for repayment terms, loan amounts and APR discounts.
• Repayment experience: For starters, we consider each lender’s reputation and business practices. We also favor lenders that report to all major credit bureaus, offer reliable customer service and provide any unique perks to customers, like free wealth coaching.

According to our systematic rating and review process, the best secured personal loans come from Best Egg, Digital Federal Credit Union, First Technology Credit Union, Regions Bank and Upgrade.