Need to borrow some cash for an unexpected financial need or a major purchase? Secured personal loans are a great option to fill your funding needs that come with great rates and easier approval than some other forms of lending. And while these are awesome things to hear, there is some additional risk that comes with putting up an asset as collateral. But if you understand everything there is to know about these loans, and you find the best secured loans out there — it can be smooth sailing. We used our proprietary SimpleScore system to rate the best secured loans, reviewing rates, eligible accounts, loan amounts, customer satisfaction and customer support.
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The 5 best secured personal loans of 2020
| APR Range | Term | Loan Amount | |||
|---|---|---|---|---|---|
| Wells Fargo | Varies | N/A | $3K–$250K | CD, savings account | 3.25 |
| TD Bank | Varies | N/A | $250K–$5M | Investment accounts | 3.75 |
| First Tech Credit Union | 3.00%–9.00% | N/A | $25K–$1M | Stocks, savings account | 3.75 |
| Fifth Third Bank | 5.14%–8.64% | N/A | $2K–$500K | CD, savings account, investment account | 4 |
| Regions Bank | Varies | N/A | $250–100% of collateral | CD, savings account, money market account | 5 |
Rates accurate as of September 27, 2020 and exclude autopay discounts.
Best for people with CDs – Wells Fargo
If you’ve got CDs with Wells Fargo, you can borrow cash for up to 10 years. It’s hard to get mad about that sort of flexibility from such a major name in banking.
Secured personal loans through Wells Fargo are available for customers with CDs or savings accounts with the bank. Wells Fargo has loans up to a quarter of a million dollars with repayment terms all the way out to 10 years. What’s great is that you can continue to earn interest on your accounts while still meeting your financial needs. A few other great perks we like are only a $75 origination fee, funds available by the next business day and a lot of repayment flexibility.
Best for large loans – TD Bank
If you’re looking to borrow a smaller sum of money, TD’s secured line of credit loan isn’t for you. But if you have a large need over a quarter-million bucks, it’s a great option.
For smaller amounts of money, the TD Fit unsecured personal loan is an option for you. But when it comes to the secured side of the house, options are only available for larger sums of money starting at $250,000. These loans are great for long-term cash-flow needs, education expenses, real estate purchases and refinancing debt. And depending on what your investment accounts with the bank look like, you may be able to get upwards of $5 million in funds. Options are available as a secured fixed loan or a secured line of credit.
In the News
In a recent earnings call, TD Bank execs mentioned the bank could be making a stronger move towards being mobile app- and tech-based with less of a focus on tellers.
Best for people with stocks – First Tech Credit Union
It’s pretty unique that the company lets you use your stocks as collateral. This lets you keep earning in the market while getting the cash you need. Just be careful if you have a higher-risk investment portfolio.
For prospective borrowers with a lot of stocks looking to borrow money, First Tech Credit Union could be the ideal option to meet your money needs at a great rate. First Tech Credit Union secured personal loans let you use your stocks or savings accounts as collateral for your loan. What stands out is the rates with your savings account start at an impressively low 3% APR. If you want to use your stocks as collateral, that jumps up to 4.50% APR, which is still a competitive rate. One thing we really like about the options here is that loans are available as low as $25,000 all the way up to $1 million. While this isn’t great for really small needs, it’s still some ideal flexibility that can meet a wide variety of needs.
Best for existing customers – Fifth Third Bank
A lot of the lenders out there don’t have great options for people needing a smaller sum of money. Fifth Third Bank flips the script and has options available as low as $2,000, which is a great competitive advantage.
Secured loans available from Fifth Third Bank have a lot of factors to be happy about. There are no closing costs, no annual fees and no prepayment penalties if you want to pay the loan back early. Additionally, it’s great to see flexible options for people who may only need a few thousand dollars or several hundred thousand dollars. Repayment terms are a bit shorter than some of the other options, but five years is still plenty of time for many borrowing needs.
Best for savings or money market collateral – Regions Bank
With options available for loans as low as $250 and all the way up to 100% of the value of your capital, Regions wins the award for ultimate flexibility in meeting the most needs.
Regions Bank offers secured loans to current customers who have a CD, savings account or a money market account. Loans start as low as $250 with fixed rates and flexible repayment terms that are heavily dependent on your choice for collateral. Rate discounts are available if you choose automatic payments deducted from one of your Regions accounts.
What is a secured personal loan?
One of the most basic types of loans you can get is a personal loan. By definition, a personal loan is when a bank, credit union or lender gives you the money you need to borrow upfront in exchange for you repaying that money plus interest and fees over an agreed-upon period of time. Compared to unsecured personal loans, secured personal loans generally have a much better interest rate thanks to the decreased risk to the lender. While most people are thinking of an unsecured loan when they talk about a personal loan, a secured option may be ideal if you have the collateral needed to get a lower rate.
[ Read: Personal Loans for Self-Employed ]
How secured personal loans work
Before you borrow money for anything, you need to make sure that you fully understand what you’re getting into. This becomes especially true when taking out a loan that requires you to put up collateral. With an unsecured loan, defaulting on the loan will destroy your credit, but you won’t lose any of your property or assets. With a secured personal loan, though, defaulting can result in a lot more issues.
[ More: Secured vs. Unsecured Personal Loans ]
Collateral
The major difference between a secured personal loan and an unsecured personal loan is collateral. Collateral is an asset that you “put up” to secure your loan. This could be something like a car, certificates of deposit or your house. If you default on your loan, the lender can take your collateral. While this does increase the risk for you, it lowers the risk for the lender, which means you generally can get a lower rate.
Secured loans vs. unsecured loans
Because of the collateral requirement, there are several benefits and things to consider with secured and unsecured loans. The two biggest differences between the products are with risk and rates. With a secured loan, the borrower (you) carry more risk because you have to put up an asset. The benefit, though, is a lower rate. For an unsecured loan, the lender is taking on more risk because they don’t have a tangible asset helping to mitigate the risk. While this is good for you, you will pay a higher interest rate because of the elevated risk.
What to consider when getting a secured personal loan
There are quite a few things you should be aware of when taking out a secured personal loan. The most important thing to note is what happens if you’re unexpectedly unable to make your payments. What happens to your collateral? Are there any programs in place to help keep you from losing your collateral? Is the risk of the worst-case scenario worth your need for the money? No one takes out a loan expecting to default, but you need to consider all of the possible scenarios just in case.
[ Related: Can Personal Loans Improve Your Credit Score? ]
How to find the best secured personal loan
- Determine how much money you need. You can’t start shopping for the best secured loans until you know exactly how much you need to borrow. By taking the time to figure this out first, you not only make the whole process easier, but you can protect yourself from the temptation to borrow more money than you need.
- Determine what assets you have to use as collateral. Secured loans require collateral. Before you start looking at the different secured loan companies out there, figure out what assets you have that could be used as collateral. Additionally, determine which of these assets you’re comfortable using to secure your loan. While the collateral can help you get a better rate and easier approval, it’s not worth it if the asset is something you can’t deal with losing if life changes.
- Shop your lending options. Once you know what you need, it’s time to start comparing options. The best advice is to keep an open mind and collect as much information about the available options as possible. Check your bank, online lending options, local lenders and any other banks or credit unions offering secured loans. There is no cost or risk to your credit score by shopping for multiple options.
- Make an informed decision. After you explore all the different lending options out there, it’s time to make a decision. Make sure you look at more than just the rate you’re getting. Factors like customer service, lender reputation, repayment terms and programs to help if you have trouble paying are some factors to consider.
Personal loan FAQs
A secured personal loan can be used to meet a wide variety of borrowing needs. Some of the more popular uses include medical expenses, home improvements, refinancing debt, larger purchases and most other unexpected cash requirements.
Secured personal loans generally are easier for borrowers to get than unsecured loans. The reason for this is because the risk to the lender is lower due to the presence of collateral. With unsecured personal loans, the lender has to look at less-concrete factors like your credit score and overall financial picture.
You have several different options for getting a secured personal loan, including a bank, a credit union or a private lender. Generally, getting a personal loan from your existing financial institution may be the easiest path forward, though, you should still shop around for the best offer.
Too long, didn’t read?
Secured personal loans can get you the money you need with a low-interest rate. However, you will need collateral to secure the loan, and you do need to understand the inherent risk.
The SimpleScore is a proprietary scoring metric we use to objectively compare products and services at The Simple Dollar.
For every review, our editorial team:
- Identifies five measurable aspects to compare across each brand
- Determines the rating criteria for each aspect score
- Averages the five aspect scores to produce a single SimpleScore
Here’s a breakdown of the five aspect scores and their rating criteria for our review of the best credit monitoring services of 2020.
Why do some brands have different SimpleScores on different pages?
To ensure the SimpleScore is as helpful and accurate as possible, we developed unique criteria for every category we compare at The Simple Dollar. Since most brands offer a variety of financial solutions, their products and services will score differently depending on what we’re scoring on a given page.
However, it’s also possible for brands to have different SimpleScores across multiple pages on The Simple Dollar. For instance, if we compare Experian’s ID theft monitoring services using SimpleScore, it scores a 4 out of 5. However, if we apply our SimpleScore methodology for credit monitoring services, Experian scores a 4.4 out of 5. Each unique criteria results in separate SimpleScores for multiple brands based on what we’re comparing.
Questions about our methodology?
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Basic plan price
We award brands who have lower monthly costs for credit monitoring services with higher scores in our methodology.
Premium plan price
We award brands who have lower monthly costs for credit monitoring services with higher scores in our methodology.
Perks
Who doesn’t like a nice perk? We awarded brands with higher scores if they offered perks to customers, such as free trials, family plans, discounts for annual billing and more than two pricing tiers.
Customer support
The SimpleScore system rewards brands that have multiple channels of support so customers can contact representatives in a variety of way.
Mobile app rating
We compared brands based on their mobile app ratings as an average of Google Play and iOS App Store ratings.
