Why You Can Trust the MarketWatch Guides Team
Here’s a breakdown of how we reviewed and rated top personal loan providers
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Providers RatedOur team researched more than two dozen of the country’s most popular personal lenders, including large online companies like SoFi, big banks like Wells Fargo, and peer-to-peer lenders like Upstart.
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Data Points AnalyzedTo create our rating system, we analyzed each personal loan company’s disclosures, licensing documents, marketing materials, sample loan agreements and websites to understand their loan offerings and terms.
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Loan Features TrackedOur team regularly collects data on each company’s loan offerings and terms, such as minimum and maximum loan amounts, origination fees and discounts.
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Professionals ConsultedBefore we began our research process, we consulted with financial advisors and industry experts to ensure our evaluations covered the banking product aspects that matter most to potential customers.
The Best Secured Personal Loans
Secured personal loans can be hard to sort through. To help you make the best decision, we at the MarketWatch Guides team have selected the top secured personal loan lenders in the industry, based on interest rates, fees and loan features (see our full methodology below).
There are key differences between types of secured personal loans, especially around the collateral they require.
More common are personal loans secured by a cash asset you have – like a savings account or certificate of deposit (CD). These are called deposit-secured loans.
Other lenders offer personal loans backed by physical assets, like your vehicle or the fixtures in your home.
Deposit-secured loans generally earn higher ratings, though they may not be an option for everybody. They require you to have a significant amount of savings on hand. Our recommendations for these loans are:
- Patelco Credit Union: Our top pick
- Regions Bank: Fastest funding
- Digital Federal Credit Union: Longest loan terms
Other secured loan lenders ask you to pledge material items as collateral – such as your car or home furnishings. The best options in this category are:
- Upgrade: Best for fast approval
- Best Egg: Best for good credit
Best Deposit Secured Loan Options
A main category of secured loans uses your savings or a certificate of deposit (CD) as your collateral. It might seem counterintuitive to borrow your own money and pay interest, but these loans are popular for several key reasons.
You can use these loans to help raise your credit score by making regular payments that show credit agencies you consistently pay on time. They allow you to maintain your savings balance, even if you have an urgent financial need. If you bought a certificate of deposit and can’t withdraw the money for a set period, you can still access your money through this type of loan.
These loans typically have no fees and low interest rates. But keep in mind, you usually can’t withdraw funds from your account while your loan is open.
Patelco Credit Union
Patelco Credit Union Overview
Patelco is a credit union founded in 1936 that operates in all 50 states. While membership was originally limited to individuals who lived, worked or studied in certain areas of California, you now automatically become a member when you open an account, and it’s free to join. Patelco’s Savings and Certificate Secured Loans offer the lowest annual percentage rates (APRs) on our list at 2.5%. APR measures the true cost of a loan, including both interest rate and fees.
With Patelco, you can borrow from $300 up to the full amount in your savings or CD account with terms from six to 60 months or until your CD has matured.
Pros and Cons of Patelco
Pros Low APR: Patelco offers the lowest APR on our list, starting at just 2.5% for savings loans. Easy to join: Membership is open to anyone in the U.S. and you automatically become a member when you open an account. Virtual branches: While Patelco only has physical branches in California and shared branches outside of the state, you can access “virtual branches” and tellers via Zoom during business hours. Free financial coaching: You can meet with a certified financial specialist to help create a money management strategy while you pay off your loan. Cons Low savings rates: You could earn a higher APR on your savings at other banks. Patelco’s savings rate for savings accounts is just 0.05% APR and you have to have your money there to borrow against it. Few physical branches: You’re stuck with virtual help for your loan application if you live outside of California – Patelco only has 37 physical branches in and around the Bay Area.
Patelco Savings or Certificate Secured Loans
Our top pick offers either savings-secured or certificate of deposit (CD) secured loans. Savings loans allow you to borrow against any money in a Patelco savings account with terms from six to 60 months and a low 2.5% APR. There are no origination fees
Certificate loans use your CD as collateral. If you need cash before your CD is due, you can borrow against any money in your CD at rates of 2.25% plus your CD rate. Patelco’s CD rates currently run from 1% to 3.93%, so your total APR would be 3.25% to 6.18%. The full amount of your loan is due when your CD matures.
Regions Bank
4.3
Regions Bank Overview
Regions Bank, a large regional bank with a major presence in Texas and branches across America’s South and Midwest, offers deposit-secured loans with varying terms depending on how much you borrow. You can borrow from $250 up to your total account balance in a CD, savings or money market account. You’ll need to set up an account with Regions over the phone or in person in order to apply and close your loan within a physical branch.
Pros and Cons of Regions
Pros Same-day funding: Current customers may access loan funds the same day they’re approved, but you have to close your loan in a Regions branch. Automatic payment discount: Regions rewards customers with discounts of 0.25% to 0.5%, depending on the length of your relationship with the bank. Cons 36-month minimum term: Terms below three years are not offered, meaning you’ll pay interest for longer than you may need. Only available in 16 states: Regions branches are only available in the South, Midwest and Texas.
Regions Deposit Secured Loans
Deposit-secured loans are available through an online application and require a Regions CD, savings or money market account as collateral. Regions will pre-approve you quickly and there’s no impact on your credit score. To get the best interest rates on these loans, you’ll need to enroll in autopay — if you’re a Regions customer of six months or more, you can get a discount of 0.25% to 0.5% on your rate.
Deposit-secured loans feature interest rates of 4% to 8.63%, depending on the loan amount and whether it’s secured by a CD (3.75% plus the CD rate, currently 4.16% to 4.88%) or a savings account (4% to 6%). There are no origination fees, but there are late fees. You can borrow as little as $250 up to your account balance for a savings or money market account and $2,000 or more for a CD account, up to the total amount you have in your account.
Digital Federal Credit Union
4.2
Digital Federal Credit Union Overview
Digital Federal Credit Union (DCU) is a top-20 credit union with members throughout the U.S and physical branches in Massachusetts and New Hampshire. It has consistently provided cutting-edge financial technology for members, such as being an early adopter of smartphone check deposits. DCU offers savings- and certificate-backed loans with terms up to 120 months. You can borrow up to the balance in your account.
Pros and Cons of DCU
Pros No required payment for 60 days: You can defer your first payment by two months after you take out your loan for savings secured loans Pay your loan back over 10 years: DCU has a maximum repayment term of 120 months, the longest on this list. Longer loan terms mean lower monthly payments, though you’ll pay more in interest over the life of the loan. Debt and budget coaching: DCU offers extensive financial coaching at no cost to members through their partner Balance Cons Membership is not automatic: Some credit unions provide membership automatically, but with DCU you have to qualify and apply first. To do so, you’ll need to either work for a company on an approved list, or join a nonprofit organization affiliated with the credit union by making a donation of $10 to $35. Limited physical presence: DCU only has physical branches in Massachusetts and New Hampshire, though it does have phone, email and live chat support during business hours.
DCU Savings and Certificate Secured Loans
DCU offers both savings-secured loans and CD-secured loans. For savings-secured loans, the credit union offers up to a 10-year term with rates of 3.5% APR. For certificate-secured loans, terms are up to 60 months and rates are 3% over the CD rate (CD rates at DCU range from 3.4% to 5.25%, so total APR would be 6.4% to 8.25%).
There are many ways to become a member of DCU. There is a long list of eligible employers whose employees can automatically become members, or join a participating organization such as Reach Out for Schools, a non-profit that adopts school classrooms, for as little as $10. DCU offers free financial coaching to all members through Balance, a financial counseling firm.
The Best Property-Secured Personal Loans
Another popular type of collateral used for a secured personal loan is personal property, such as a car, boat, motorcycle or fixtures in your home like cabinets or vanities. These loans tend to have higher interest rates than deposit-secured loans, but usually offer larger loan amounts and lower interest rates than unsecured personal loans. They are often easier to qualify for than unsecured loans, as well.
Upgrade
4.3
Upgrade Overview
Upgrade offers unsecured and secured personal loans from $1,000 to $50,000 with terms of 24 to 84 months. All secured loans by Upgrade use your vehicle as collateral. Beware of high origination fees (up to 9.99%) and higher interest rates, especially if you don’t have good credit. You’ll get the best rates with a secured loan and automatic payments.
Pros and Cons of Upgrade
Pros Instant approval: You can be approved within just a few minutes, our only recommended loan provider to approve this fast. Preapproval doesn’t impact your credit score: The initial application only initiates a soft credit pull that won’t affect your credit score Borrow up to $50,000: Borrowers can receive between $1,000 and $50,000 if approved. Joint applications supported: Add a cosigner who can share their good credit with you but who is also responsible for repayment. Cons Origination fees up to 9.99%: Upgrade has the highest origination fees on our list. Higher origination fees mean you’ll get less of the money you qualified to borrow High APR: If you don’t have good to excellent credit, rates can be as high as 35.99%.
Upgrade Vehicle Secured Loans
When applying for a personal loan from Upgrade, you’re shown secured and unsecured options together. Applications rely on a soft credit inquiry — which doesn’t impact your credit score — for your initial prequalification. A hard inquiry is required to finalize and approve your application. Upgrade’s application and approval process is quick and you can get funding as fast as the next day.
Secured personal loans come with terms of 24 to 84 months. You can borrow $1,000 to $50,000 and pay off your loan early with no fees. If you choose a secured personal loan, you’ll need to use your car as collateral.
Beware of origination fees, which are 1.85% to 9.99% and can significantly cut into the funds you receive. With a 5% origination fee, you would only receive $9,500 of a $10,000 loan. As of this writing, rates range from 8.49% to 35.99% APR. While applicants with strong credit histories can get excellent rates, borrowers with negative credit experiences could have high rates and fees.
Best Egg
3.6
Best Egg Overview
Best Egg is an online lender offering secured loans of $2,000 to $50,000 with terms of 36 to 84 months. Their origination fees range from 0.99% to 8.99%. Best Egg isn’t available in all areas and secured loans require you to put up fixtures in your house (kitchen cabinets, bathroom vanities) as collateral or use the equity in your paid-off car. You’ll get the best rates if you have good credit and household income on the higher side.
Pros and Cons of Best Egg
Pros Secured and unsecured loans supported: You can decide the best option for your financial needs since both are presented No impact on credit if not approved: Pre-qualification is only a soft pull on your credit Borrow up to $50,000: Loans are available from $2,000 to $50,000, though certain states have higher minimums Cons Minimum 36-month term: Terms start at 36 months, with no 12- or 24-month terms available High origination fees and interest rates: Unless you have good credit, you’ll get hit with high fees and APRs (as high as 35.99%). Limited availability: Best Egg is not available in Iowa, Vermont, West Virginia or U.S. territories.
Best Egg Secured Loans and Vehicle Equity Loans
Secured personal loans from Best Egg are available with amounts ranging from $2,000 to $50,000. Borrowers in Massachusetts have a $6,500 minimum, those in Ohio have a $5,001 minimum and Georgia residents have a $3,001 minimum. Best Egg isn’t available in Iowa, Vermont, West Virginia or U.S. territories.
Secured loans from Best Egg require you to use home fixtures or a paid-off vehicle as collateral. The home fixtures may include lights, bathroom vanities, kitchen cabinets or anything else physically attached to the house. Appliances can’t be used as collateral. You have to own your vehicle outright, and can’t have payments or a lease. If you stop paying as agreed, Best Egg can repossess your fixtures, so only borrow if you believe you can afford the regular payments.
Interest rates are very competitive to moderately high, 5.99% to 29.99%, depending on your credit history. Origination fees range from 0.99% to 8.99%. Loans with terms of 48 months or higher will have an origination fee of at least 4.99%. Borrowers with a minimum 700 FICO credit score and $100,000 income can qualify for the lowest rates.
Best Egg loans start with 36-month terms and go up to 84 months, but you can pay off a loan early without penalties.
*APR accurate as of Mar. 8, 2024
Another Lender Worth Mentioning
OneMain Financial
OneMain Financial offers secured personal loans for borrowers with low credit. OneMain accepts most types of vehicles as collateral, though if you’re in the military, you won’t be able to get this type of loan. Loans can typically be between $1,500 and $20,000 — though some states have higher minimum and maximum loan amounts.
OneMain excels in fast approval with same-day or next-day funding. You can also get prequalified in less than five minutes with no impact to your credit score.
Terms offered are 24, 36, 48 and 60 months. One-year loans are not available, but there’s no prepayment penalty if you want to pay off your loan early. Interest rates range from 18% to 35.99%. The lowest interest rates are higher than many competitors, so remember to shop around to ensure you get the best deal for your unique borrowing needs.
Flat-rate origination fees range from $25 to $500, and percentage-based fees go from 1% to 10% of the loan amount. Interest rates are fixed for the duration of the loan.
Compare the Best Secured Personal Loans
Secured vs. Unsecured Loan
Both secured and unsecured loans are installment loans. These lump-sum loans generally have lower interest rates than credit cards or payday loans. Both are designed for personal needs like debt consolidation, medical expenses, moving costs or home renovations. Both loans are fast to apply for and get you funds within just a few business days.
The main difference between unsecured and secured loans is the use of collateral. For an unsecured loan, lenders use your credit history and income to decide if you’re likely to pay your loan back on time. For a secured loan, the lender asks for a piece of collateral that can be seized if you don’t repay your loan on time.
“Secured personal loans, backed by collateral, pose less risk for lenders, resulting in an easier qualification process and lower interest rates,” said Ohan Kayikchyahn, a certified professional planner, in an interview with MarketWatch Guides. “The drawback is that if the borrower fails to meet repayment obligations, the lender can potentially seize the collateral.”
What Can I Use a Secured Personal Loan for?
Secured personal loans can be useful in many situations. Just like unsecured personal loans, you can use secured personal loans to fund medical expenses, home renovations or vehicle purchases. Kayikchyan advised thinking twice before taking out a loan for nonessential expenses.
Debt Consolidation
The MarketWatch Guides team’s latest survey showed that debt consolidation was the most popular reason for taking out a personal loan. If your credit isn’t great and you don’t qualify for an unsecured personal loan, or you can only qualify for a high APR, look into a secured personal loan.
With rates as low as 8.49% for a secured vehicle loan, you could consolidate credit card balances with higher interest rates into a lower interest-rate secured loan. For example, if you consolidated three credit cards with a total balance of $23,000 and an average APR of 24.59% into one secured loan with an APR of 9.99% and a payoff of three years, you would lower your monthly payment from $909.50 to $742.04 and discipline yourself to pay off your debt within three years.
Home Renovations
While some people use a home equity loan to finance renovations, personal loans are much faster to apply and qualify for. Home renovations were the second most popular reason to take out a personal loan in our survey, with over 20% of respondents indicating they took out a loan for this reason.
While you may have a higher monthly payment with a secured personal loan’s shorter payback period, you’ll ultimately pay less interest than with a 10-year home equity loan. You’d pay over $6,000 more in interest with a $20,000, 10% APR home equity loan with a 10-year term than with the same secured loan paid back over five years.
Car Loan
Almost 19% of borrowers in our survey used their personal loan for car financing or repairs. If you have cash saved up, but don’t want to spend it all or can’t qualify for an unsecured loan, you might consider a savings-secured loan. This way, when you’ve paid off your loan, you still have your savings intact.
Tyler Culwell of Clarksville, Tenn., told MarketWatch Guides that he considered a savings-secured loan when buying a used car. He was quoted a rate of around 4%, but ultimately took out a three-year auto loan at a rate of 7.04%.
He said he prefers to have access to his savings in case he needs his money in the next three years and instead, pay off his auto loan as fast as possible.
“The benefit of the savings loan was that I would’ve been able to boost my credit score, and commit to paying my savings back. But with my wife and I being as disciplined as we are with saving and having a solid credit score, it didn’t make sense to use this option,” he said.
How Secured Personal Loans Affect Your Credit
If you have a credit score below 600 or a negative event on your credit history, you may have trouble qualifying for an unsecured personal loan.
Cue the secured personal loan: Because you’re backing the loan with collateral, lenders are more likely to extend you credit. This can help you improve your credit score. A full 30% of your credit score is based on the total amount you owe to lenders, so a secured loan will improve that percentage. And 35% is based on your payment history, so if you make on-time payments every month, your score should improve over time.
Keep in mind, though, that like most other loans, secured loans have a short-term negative impact on your credit when signing up.
How to Apply for a Secured Personal Loan
Applying for a secured personal loan is a fairly quick process once you have all your necessary paperwork. Many lenders can preapprove you within a couple of minutes. Normally, you can be fully approved the same day. Make sure to do the following:
- Compare lenders: There are a lot of lenders who will pre-approve you for a loan without negatively affecting your credit score, so make sure to check out interest rates for at least three. Credit unions normally have the best rates, so check there first (you don’t normally have to become a member of the credit union until after you’ve been approved for a loan). Remember that different types of collateral will affect your interest rate.
- Find your documents and apply: To fill out a full loan application, you will generally need your ID (driver’s license or passport), proof of residence (a lease or utility bill with your name and address on it) and your last pay stub or tax return. Some lenders require you to verify a bank account and/or provide proof of insurance if you’re using a vehicle as collateral.
Kayikchyahn recommends you consider applying in person at a local bank or credit union if you have a lot of questions or want to understand the process better.
- Watch for your funds: Once your application is approved, you’ll normally receive your loan disbursem*nt within 1-3 business days if you elected to have it directly deposited to your account. Call the bank to make sure funds are available if you’re receiving your money at a local branch. If you had to pay any origination fees, these will be taken out of the amount you borrowed.
Tips for Choosing the Right Secured Personal Loan
When shopping for the best secured personal loan, keep the total cost in mind. In addition to the interest rate, consider application fees, origination fees, administrative fees and late fees, Kayikchyan said. Also consider:
- Prepayment penalties: Make sure you aren’t penalized for paying off your loan early.
- Loan term: Shorter loan terms are often cheaper when you add up the total interest payments over the life of the loan. Longer terms may have a lower monthly payment, but you’ll usually pay more overall.
- Collateral: When considering if you can afford the loan, pay close attention to collateral requirements. Losing your collateral for nonpayment causes long-term damage to your credit.
The Bottom Line
If you need funds now but want a low interest rate or can’t qualify for an unsecured personal loan, look into a secured loan. Using a vehicle or savings as collateral, you can qualify for more money with lower rates, but there aren’t a ton of lenders offering these types of loans. When using a secured loan, you can lose your collateral if you don’t pay the loan as agreed for any reason, so consider the risks when signing up.
Frequently Asked Questions About Secured Personal Loans
Qualifying for secured loans is often easier than unsecured loans. Lenders consider secured loans less risky because they can seize the collateral needed to secure the loan to recoup potential losses if you don’t pay. That also means you’ll usually have a lower interest rate and the ability to borrow more funds.
Interest rates vary widely for secured personal loans and depend a lot on the collateral you put up. Lenders usually offer the best rates for savings account loans because you’re putting up actual cash as collateral. Currently, rates from our recommended lenders range from 2.5% for a savings-backed loan to 35.99% for a vehicle-backed loan. To get the best rates, you’ll need savings, a high income and excellent credit.
You can usually qualify for a secured personal loan with a lower credit score than an unsecured loan. Credit score requirements vary by lender, and not all lenders disclose their minimum scores, but you can generally qualify with a score of 600. Some lenders, like OneMain, might approve you with a lower credit score than that, but you’ll likely have higher origination fees and APR.
Methodology: Our System for Ranking the Best Personal Loans
Our team put together a comprehensive100-point rating systemto evaluate personal loan companies. We gathered data points from 28 of the most prominent lenders in the US and analyzed disclosures, licensing documents, sample loan agreements, marketing materials and websites. Our rating system takes into account four broad categories.
- Affordability(35%): How expensive each company’s loans are to pay back.
- Loan features(35%): The breadth of loan terms and features available to prospective customers.
- Customer experience(20%): Ease of application, prequalification and customer service interactions.
- Company reputation(10%): An exploration of lenders’ Better Business Bureau files, customer reviews and outstanding regulatory actions.
Our top-rated lenders may not be the best fit for all borrowers. To learn more,read ourfull personal loans methodology.
Editor’s Note: Before making significant financial decisions, consider reviewing your options with someoneyou trust, such as a financial adviser, credit counselor or financial professional, since every person’s situation and needs are different.
