Starting at 3.00% + certificate account rate
$500 - $500,000
Up to certificate maturity
None
Share certificate account
First Technology Federal Credit Union’s Certificate Secured Loan can be a good way to invest and borrow at the same time. As you pay back your loan, the funds in your certificate account will continue to earn dividends. Although the same is true for a savings-secured loan, certificate accounts generally earn more interest.
What’s more, depending on your credit profile and how much you have in your certificate account, you could borrow up to $500,000.
Like other credit unions, you must join First Tech before you can open an account. If you work for a partnering employer, have a family member who is currently a member or live in Lane County, Ore., you can join.
If you don’t meet these requirements, you’ll have to sign up for the Computer History Museum or Financial Fitness Association. However, First Tech will pay for your first year of membership, and you’re not required to maintain membership to keep your First Tech account.
After you join First Tech, you’ll need to have a certificate account to take out a Certificate Secured Loan. These require a minimum opening balance of $500. You may also need to meet the credit union’s credit requirements, which are undisclosed.
Starting at 3.50%
Up to your savings account balance
Up to 120 months
None
Savings account
Digital Federal Credit Union (DCU) offers a few secured loans. Notably, its Savings-Secured Loan offers one of the longest loan terms on the market — 120 months.
With this loan, you’ll borrow against your DCU savings account, with a fixed APR starting at 3.50%. Borrowers with lower credit scores could be eligible, since DCU states that repaying a Savings-Secured Loan on time could improve your credit.
As a credit union, you must be a DCU member to take out a loan. However, DCU membership is open to those in all 50 states.
If you don’t live, work, worship or go to school in certain communities in Massachusetts or work for a participating employer, you’ll need to join one of DCU’s participating organizations. Although all these organizations charge a membership fee, they are open to anyone.
Also, you’ll need to open and fund a DCU savings account, since this is what you’ll be borrowing against. Finally, DCU will likely review your borrowing history to determine eligibility, although it doesn’t disclose its credit-related criteria.
Starting at 4.00%
Starting at $250, minus fees
Varies based on loan amount
None
Savings account
If you live in a state where Regions Bank does business and are looking to build credit, this bank’s Deposit Secured Loan might be worth exploring. As long as you have at least $250 to deposit into your savings account, you could take a secured loan against it.
And thanks to its minimum loan amount, this product could be a great fit if you already have a Regions savings account and need a small loan.
To determine your eligibility, Regions will review your overall credit history as well as your income. Regions is only available to residents of Alabama, Arkansas, Florida, Georgia, Iowa, Illinois, Indiana, Kentucky, Louisiana, Missouri, Mississippi, North Carolina, South Carolina, Tennessee, Texas and Utah.
5.99% to 29.99%
$2,000 - $50,000
36 to 84 months
0.99% - 8.99%
Home fixtures
Best Egg’s Secured Loan + Homeowner Discount is a unique loan that uses your home’s fixtures as collateral. Eligible fixtures could include bathroom vanities, built-in cabinetry and other elements permanently attached to your home.
Like any secured loan, this product comes with some risk. Best Egg will place a lien on your fixtures while your loan is open. If you sell your home before paying off your loan, you could default. If this happens, your entire loan balance could be due immediately. Best Egg may also repossess your home’s fixtures from the new owner.
Still, this loan may be worth it. Best Egg states that borrowers may save an average of 20% on their APR by using collateral (as opposed to getting an unsecured loan). Just be sure that you understand how this product works before signing on the dotted line.
To learn more, read our full Best Egg personal loan review.
Although Best Egg uses your home’s permanent fixtures as collateral, it doesn’t need to appraise those fixtures’ value. Instead, Best Egg will review your credit history and home equity to ensure you qualify.
You must also be a U.S. citizen or permanent resident living in the U.S., the age of majority in your state and have a personal checking account, email address and physical address to apply.
Best Egg loans aren’t available in the District of Columbia, Iowa, Vermont, West Virginia or U.S. Territories.
8.49% - 35.99%
$1,000 - $50,000
24 to 84 months
1.85% - 9.99%
Car less than 20 years old
At just 580, Upgrade’s minimum credit score requirement is lower than many lenders. And using your car as collateral for Upgrade’s Auto Secured Loan could further boost your personal loan approval odds.
It’s important to note, however, that those who do have bad credit could pay an APR as high as 35.99%. You may want to choose Upgrade’s minimum loan term to pay less interest over the life of your loan (although higher terms are also available).
Read our full Upgrade personal loan review.
To get an Auto Secured Loan through Upgrade, your car must meet some eligibility requirements. First, it must be less than 20 years old. You must also have insurance and own it outright. It has to be registered in the state that you live in and it cannot have a salvage title. Only personal vehicles are eligible.
Upgrade will also evaluate your overall creditworthiness by reviewing your credit score, debt-to-income ratio and payment history. Applicants need to be U.S. citizens, permanent residents or living in the U.S. with a valid visa. Lastly, you must be of legal age, have a bank account and email address.
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:
Beware: Secured loans and predatory lending
Not all secured loans are created equal. Some secured loans, especially those seeming to target bad credit borrowers, are far more likely to fall under the category of predatory lending, including:
Title loans: In exchange for a loan, you’ll give your car title to the lender. If you don’t pay your loan back, it can repossess your vehicle. Although this doesn’t sound too different from a regular auto-backed loan, title loans come with excessively high APRs and short loan terms (around 30 days).
Pawn shop loans: Under this model, you’ll give a pawn shop a valuable personal item. Jewelry, for instance. The pawn shop will give you a loan based on the value of your item (but much less than what it is appraised for). You’ll have 30 to 60 days to pay back what you borrowed, plus fees. Otherwise, the pawn shop can sell your collateral.
Applying for a personal loan — whether it’s secured or unsecured — typically follows a similar process.
If you have a lower credit score, it’s likely a good idea to try and improve your score before applying to boost your odds of loan approval. Here are some tips to make it happen.
Secured loans and default risk
Secured loans have many benefits, but they also come with some big risks. If you are unable to keep up with your loan payments, your lender has the right to repossess the asset you’ve used as collateral. That’s why it’s important to choose your collateral carefully and make sure you’re able to comfortably budget for your payments before applying for a secured loan.
Unfortunately, there’s no one-size-fits-all answer to the question, “What credit score is needed for a loan?” Each lender will impose their unique set of eligibility requirements, so be sure to research lenders and verify that you fit their criteria before applying for a loan.
The decision of whether or not it makes sense to apply for a secured loan depends on factors such as your financial position and credit score. On one hand, these loans often feature flexible qualifying standards, larger loan amounts and more affordable rates than unsecured loans.
However, there is always the risk that your lender may repossess your collateral if you are unable to keep up with your loan payments. Be sure to weigh the risks and benefits carefully before agreeing to a secured loan.
Usually, but the minimum credit score needed for a secured loan is typically lower than that of an unsecured personal loan. If you have no or bad credit, you may want to look into a no-credit-check personal loan, instead. APRs on these types of loans are high, but they can come in handy when used responsibly or during a financial emergency.
