Best Secured Personal Loans

Financing with low rates and long repayment terms

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A secured personal loan is backed by collateral. If the borrower defaults, the lender can collect the collateral. For this reason, secured loans tend to offer better rates than unsecured loans. In addition to offering better rates, people take out secured loans to help improve their credit, consolidate debt, or pay for home renovations. 

If you have good credit, you can expect rates between 3% and 6%. However, if you have poor credit, you may have rates as high as 36%. Repayment terms depend on the collateral backing your loan. A home equity line of credit (HELOC) can have loan terms up to 30 years, whereas a loan backed by a CD is only as long as the CD term. 

The most common secured personal loans include:

We reviewed 27 different secured personal loan lenders to determine the best options available. Lending decisions and funding should happen quickly, and rates should be low. We also looked at customer reviews, repayment terms, credit score requirements, and loan amounts available.

The Best Secured Personal Loans for 2021

Best Overall : Credit Union 1


Credit Union 1

 Credit Union 1

Credit Union 1 is the best overall secured personal loan lender because rates are low, there are no fees, there’s no minimum credit score, and your first payment isn’t due for up to 60 days. While you must be a member to take out a loan, it’s easy to open an account for as little as $10.

Pros
  • Rates just 3% to 6% above your CD or savings earnings rate

  • No fees or prepayment penalties

  • No minimum credit score

Cons
  • Must be a credit union member

  • Maximum loan terms 60 months

It’s no secret credit unions tend to have much lower fees than banks—this is because they’re member-owned. Credit Union 1 is the best overall secured personal loan lender because of its low rates and there’s no minimum credit score, fees, or prepayment penalties.

Secured personal loans use money in a savings account or CD held at the credit union for your collateral. Your interest rate is whatever your savings or CD earnings rate plus 3% to 6%. The credit union determines your rate by your credit history, although there is no minimum credit score required—most credit unions look at your history as a whole versus just an isolated numerical score, and Credit Union 1 is the same.

There are no fees or prepayment penalties, and you can apply online, over the phone, or in-person at its more than 5,000 branches nationwide thanks to Co-Op Shared Branching. Your first payment isn’t due for up to 60 days, although you can have it sooner if you choose. There are no fees or prepayment penalties, and as a member, you have access to online courses and tutorials to improve your financial literacy.

Best Repayment Terms : Wells Fargo


Wells Fargo

 Wells Fargo

We chose Wells Fargo as the lender with the best repayment terms because it offers loan terms up to 120 months, rates as low as 5.25%, and loans up to $250,000. The collateral used for this secured loan is a CD or savings account held with Wells Fargo.

Pros
  • Loan terms up to 120 months

  • Borrow up to $250,000

  • Rates as low as 5.25%

Cons
  • Must have a CD or savings account with Wells Fargo to use as collateral

  • $75 origination fee

  • Minimum credit score 670

Wells Fargo was founded in 1852 and is the fourth-largest bank in the United States by assets. While many lenders cap their repayment terms at five years, a Wells Fargo personal loan offers up to 10 years to repay at rates as low as 5.25%, making it the secured personal loan with the best repayment terms. Plus, you can borrow up to $250,000, provided you have that much in a CD or a savings account with them.  

If you default on your loan, Wells Fargo will use your CD or savings account to repay the outstanding loan amount. This means you may have an early withdrawal penalty if a CD is used. 

The minimum loan amount is $3,000. No matter the amount you borrow, the origination fee is still $75. While it offers rates as low as 5.25%, that’s for well-qualified borrowers. Your rate may be as high as 13.54%, which is still better than many lenders offer. Usually, the shorter the repayment term, the better your rate is. Plus, some checking accounts qualify you to receive a 0.50% interest rate discount. 

To get a loan with Wells Fargo, even though it’s secured by your collateral, you must have a credit score of at least 670 and sufficient income. Apply online, provided you have an account, and receive a decision in minutes. Once approved, you can track your loan progress using Wells Fargo's yourLoanTracker.

Best for Poor Credit : OneMain Financial


one main financial personal loans

If you have poor credit, you can still obtain a secured personal loan with OneMain Financial. There’s no minimum credit score because it goes by your current debt, credit history, collateral, and ability to pay. However, a higher score will still earn you a better interest rate.

Pros
  • No minimum credit score

  • Can often fund the loan the same day

  • Offers a rewards program for setting up automatic deposit and reading its personal finance articles to strengthen financial literacy

Cons
  • Rates are typically much higher than other lenders

  • It can take over two weeks to release the lien on the motor vehicle after loan payoff

  • Charges an origination fee

OneMain Financial strictly provides personal loans to consumers and specializes in helping those with poor credit. In fact, because it has no minimum credit score, it’s the best secured personal loan option for people with less-than-stellar credit. Interest rates are 18% to 35.99%, based on the borrower's credit score. Loan terms are 24, 36, 48, or 60 months, but you won’t pay a prepayment penalty if you pay it off early. 

To secure a OneMain Financial personal loan, you can apply online, but then you must visit one of its 1,500 branches located in 44 states.

Often, your interest rate and the amount available to borrow don’t quite match what the site tells you that you’re pre-approved for. This is because OneMain Financial uses stricter guidelines than you might when determining your debt and income. For example, you may think you make $60,000 per year and have a 15% debt-to-income (DTI) ratio, but OneMain Financial might not count your $25,000 in variable dog sitting income, which impacts both your DTI ratio and the income they consider for the loan.

This lender offers financial literacy courses for free, and even provides incentives to take them. If you’re a current customer, earn points for participating in the courses, enrolling in direct pay, reading its articles, and interacting with the site. Redeem your points for gift cards to places like Amazon, Lowe's, and Target. You can also earn $100 for every friend you refer, up to a total of $500.

Best for Low Rates : First Tech Federal Credit Union


First Tech Federal Credit Union

 First Tech Federal Credit Union

You’ll have a difficult time finding lower secured personal loan rates than those at First Tech Federal Credit Union (FTFCU)—as little as 3%. There are also no application fees, origination fees, or annual fees to deal with.

Pros
  • Rates as low as 3%

  • No prepayment penalty

  • No application fee, origination fee, or annual fee

Cons
  • You must have a First Tech Share Certificate or First Tech savings account to use as collateral

  • Must be a credit union member

  • Cannot change the payment date

First Tech Federal Credit Union has locations in eight states, but you can still become a member if you’re not near a branch. To join, you have to work for one of its participating employers or be a member of the Computer History Museum or Financial Fitness Association. The latter two options are available digitally, so you can join from anywhere in the U.S. With rates as low as 3%—lower than any of the lenders we considered—it’s the best secured personal loan option if you want low rates. Plus, there’s no prepayment penalty, application fee, origination fee, or annual fee.

The collateral used for a secure personal loan at FTFCU is a share certificate, stock, or savings account. You can borrow between $25,000 and $1 million if using stock, but your rate is variable and has loan terms up to 144 months. Borrow between $500 and $500,000 with a Share Certificate or savings account and get a fixed rate.

First Tech Federal Credit Union personal loan terms for savings account secured loans are up to 96 months, whereas share certificate loans go by the certificate maturity date.  

You won’t pay any prepayment penalties. However, if you default on a loan secured by a Share Certificate, you may have an early redemption fee if the credit union uses it to cover the defaulted loan.

Loan decisions are quick, and you can have funding as soon as the next business day. Your first payment isn’t due for 45 days, and if you lose your job, you can pause payments for up to three months.

Best for Small Loan Amounts : Oportun


Oportun

 Oportun

With Oportun, you can borrow as few as $300, and the maximum amount depends on what state you’re in. However, any loan amounts over $6,000 are only for qualified returning customers, so if you only need a small loan, this is the right lender for you.

Pros
  • Borrow as little as $300

  • Receive funds in as little as two hours

  • Lower rates for returning customers in good standing

Cons
  • Cannot choose or change the payment date

  • Available in just 12 states

  • The maximum loan term is 46 months

Oportun advertises itself as an alternative lender and has no minimum credit score. Even if you don’t have any credit history, you can still potentially qualify for a secured personal loan. The lender does a soft pull of your credit to determine eligibility before doing a hard pull for the loan itself.  This is the best secured personal loan option if you need only a small amount—the minimum loan is $300.

The collateral used for a secured personal loan with Oportun is your vehicle. To pledge your car, you can’t have any liens on the title and you must own it—so it must be fully paid off. You also must be the sole owner of the vehicle. 

Once approved for a loan and your car meets requirements, you receive funding in as little as 24 hours. Your car must not be older than 25 years and have under 250,000 miles on it. They don’t accept vehicles registered outside of your state, nor do they take alternative fuel vehicles or electric models. 

This isn’t a title loan because your interest rate is capped at 36% APR. Payment terms are 21 to 46 months. You won’t have a prepayment penalty, but an origination fee and tax stamp fee are calculated into your APR depending on your state of residence.

Best for Debt Consolidation : Figure


Figure

 Figure

If you want to consolidate debt, Figure has low rates, and most applications take as little as five minutes and receive instant approval. While it takes over five business days to receive funding, it’s one of the fastest HELOC loans available.

Pros
  • Most applications take five minutes and receive immediate approval

  • Sign paperwork 100% online

  • Rates as low as 2.49% with autopay

Cons
  • Funding takes 5 business days or longer

  • Maximum loan of $75,000 if your score is less than 680

  • An origination fee of up to 4.9%

Figure is an online lender renowned for its blockchain technology. When you consolidate your debt using a Figure HELOC, which is a type of secured loan that uses your home’s equity as collateral, you’ll pay a significantly lower interest rate compared to credit cards and many auto loans. This makes it the best secured personal loan option for debt consolidation, and you’ll pay as low as 2.49% APR when you opt into a credit union membership and sign up for autopay. 

Figure offers these loans completely online, and you can have a decision in minutes. Because it uses an online video notary, this also means you don’t have any paperwork to fill out at loan closing. While longer than other types of secured loans, you can receive funding in as little as five business days.

You can borrow up to $150,000, depending on your credit score. There is a one-time origination fee of up to 4.9%, but there are no prepayment penalties. You can select loan terms of 5, 10, 15, or 30 years. To qualify for a loan with Figure, you must have a credit score of at least 620, which is higher than most lenders. 

Final Verdict

Secured personal loans help you get a loan you might not otherwise qualify for, and it can build your credit. Rates also tend to be lower because the lender can collect your collateral if you default on the loan. Some lenders have no minimum credit score requirement but charge much higher interest rates in return. 

We recommend Credit Union 1 for your secured personal loan needs because it offers low rates, no fees, and your first payment isn’t due for up to 60 days. Plus, there’s no minimum credit score. 

Compare Providers

Secured Personal Loan Why We Picked It Key Benefit
Credit Union 1 Best Overall Low rates and no fees
Wells Fargo Best Repayment Terms Loan terms up to 120 months
OneMain Financial Best for Poor Credit No minimum credit score
First Tech Federal Credit Union Best for Low Rates Rates as low as 3%
Oportun Best for Small Loan Amounts Minimum loan amount is $300
Figure Best for Debt Consolidation Low rates and quick approval

Frequently Asked Questions

Are Secured Personal Loans Easier to Qualify For?

Not only are secured personal loans easier to qualify for compared to unsecured loans, but you may even get a better rate, too. This is because if you default on your loan, the lender can keep your collateral, whether it’s backed by your vehicle, savings account, certificate of deposit, or stocks. 

Do Personal Loans Hurt Your Credit?

When you first take out a personal loan, you may see a dip in your credit initially. However, if you continue to make on-time payments, there is usually an increase in your credit score. If you have no established credit, getting a secured personal loan can help show future lenders that you’re reliable. 

What Is the Interest Rate on a Personal Loan?

Interest rates on personal loans vary wildly based on many factors like credit score, payment history, debt, loan terms, and amount borrowed. These rates are usually between 3% and 36%. A secured loan can offer a lower interest rate because the lender has a right to collect your collateral if you default. 

What Alternatives Are Available to Secured Personal Loans?

Instead of getting a secured personal loan, consider an unsecured personal loan. Your interest rates will be higher because there is no collateral to protect the lender if you default. However, this also means you won’t lose collateral, like your home, stock, CDs, or savings account. 

Another alternative to a secured personal loan is a credit card. Interest rates will be higher, but some promotions offer introductory interest rates as low as 0%. Or, rewards credit cards can help you earn cash back or travel rewards.

Does a Secured Loan Build Credit?

A secured loan does help build credit, and many people get them for that sole purpose. Credit unions in particular like to advertise secured loans to build credit as a way to teach financial literacy. A member can deposit a set amount of money into a savings account and use that as collateral for a personal loan. Each payment made is reported to the credit bureaus. 

It’s important to make all of your secured loan payments on time, otherwise, you can lose your collateral and hurt your credit score. 

Can You Pay off a Secured Loan Early?

Yes, you can pay off a secured loan early. The vast majority of lenders charge no prepayment penalties for doing so, either. However, if you’re using a secured loan to help build your personal or business credit, it may be worth your while to continue making payments even though you can pay it off early. 

A time you might consider paying off a credit-building loan early is if your debt-to-income (DTI) ratio is too high to qualify for another specific loan need. For example, with your personal loan your DTI ratio may be too high to get a car loan and you’ll have to pay that credit-building loan off early to bring the ratio down to qualify.

How We Chose the Best Secured Personal Loans

We looked at 27 of the best secured personal loans available and narrowed it down to the best six options based on several features and considerations. We considered rates, credit score requirements, reviews, loan amounts, and repayment terms. Another important factor in determining the best loan options are fees—some lenders charge origination, application, and annual fees. Some lenders even charge a prepayment penalty if you pay off your loan early.

Article Sources

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  1. Federal Financial Institutions Examination Council. "Large Holding Companies." Accessed February 18, 2021.