If you’re thinking of obtaining finance to help you cover an expense, you’ve probably done your own research into personal loans. Personal loans are considered one of the original lending vehicles provided by banks in the United States. Consumers use personal loans for a variety of reasons.

Secured Personal Loans

But personal loans are slightly more complicated than they appear. There are multiple different types of personal loans. And while their overall characteristics are the same, there are some subtle differences that make a huge difference. It’s important to be aware of these differences if you want to be a responsible borrower. You should make sure to explore all types of personal loans in-depth before you make any decisions regarding what type of finance you will be seeking.

This guide is a comprehensive source of information on secured personal loans. It provides you with all the information you need to know how to determine if secured personal loans are right for you. Make sure that you take in all the information provided in this article. You don’t want to go into any lending process without being fully aware of the benefits and risks of a particular financial product.

Why People Get Secured Personal Loans

As you can see above, securing a loan is much riskier than obtaining an unsecured loan. So, why do people do it? There are several reasons that people decide to secure their loans. Despite the risks, there are substantial benefits that will truly payoff if you approach the borrowing process responsibly. Below are a few different reasons that people decide to apply for secured personal loans.

Lower Interest Rates

The primary advantage to securing a loan is the fact that your interest rate is much lower. You won’t have to deal with high interest rates that impact your ability to pay back the loan. If you’re trying to reduce the overall cost burden you have when borrowing money, securing a loan is one of the easiest ways to get the interest rate you’re looking for. Many secured loans will have interest rates that are half the amount of other types of loans.

Easier to Obtain

For obvious reasons, secured loans are much easier to obtain. Lenders know that they have the ability to claim back money that they might lose – there is much less risk involved for them. It means that you are more likely to be able to get a loan even if you have a poor credit history. Many people that typically can’t get finance due to credit problems will choose to secure a loan.

Large Lending Amounts

For those who want to borrow large amounts of money, using an asset to secure a personal loan is typically the best option. Lenders are much more likely to give you large loans if you can prove that you have collateral to pay off any debt that you might end up accruing. Make sure to talk to your lender about how much they’re willing to lend you if you’re able to secure your loan – it might be more than you think.

What Asset Should I Use to Secure My Loan?

If you do decide to get a secured loan, you’re probably wondering what you should use to secure it. You don’t want to end up using the wrong asset to secure your loan, you want to leave yourself exposed to as little risk as possible. This is especially true if you have family that rely on your ability to provide financially.

Ask your lender what you can use to secure the loan that you’re getting. Hopefully they will have a variety of different assets that can be used. As a rule of thumb, you should be aiming to use the asset that has least impact on your life. For example, if you can, try to avoid using a car or home to secure your loan. This is the quickest way to make sure that you family isn’t hugely impacted by a default on a secured loan.

Ask your lender if they have alternative methods for securing loans. Perhaps they will let you use stocks or some other form of asset that wouldn’t disrupt your life to the same degree as a home or car seizure. Keep your family in mind when determining what to secure your loan with.

What Exactly Happens If I Default?

Many people wonder what actually happens if they end up defaulting on a loan that they have secured. The process will depend on the lender, as each will have different protocols for different situations. Typically, the lender will give you some time to try and get together the money that you owe. If you still haven’t been able to do so, they will seize the asset that you had used to secure the loan. In this case, proceedings will occur in a similar way to a foreclosure.

For example, if you secured the loan using your home. The lender would likely seize the home and auction it off. They would then recuperate the money that you owed them, along with any extra fees or penalties, and then give you the rest of the money that is left over (if there is money left over). In this regard, you don’t lose the full value of your asset unless your asset is only valued at the same amount as the money that you’ve borrowed.

Drawbacks of Secured Personal Loans

While you can see there are many benefits to getting secured personal loans, there are still some pretty serious drawbacks. In fact, many people steer clear of secured personal loans because of these disadvantages:

  • Risky – At the end of the day, secured personal loans are risky because you have to put up an asset to use as collateral. You’re potentially putting your family’s financial health at risk to get financing. This is why you need to be certain you can pay back the loan if you end up securing it.
  • Fees Often High – Another disadvantage is that many lenders often still have high fees, which means that you don’t get as cheap of financing as you might think. Don’t be fooled by a low interest rate, you should always make sure to check if there are hidden fees that might impact you as well!


If you want to get a personal loan, but you don’t think you’ll be able to get an unsecured loan. There are still some options available to you to help you get financing if you don’t want to get a secured loan. One of these options is obtaining a co-signer. A co-signer is someone who guarantees the loan for you. Most people use family members as co-signers.

If you default on your loan, or you miss a payment, your co-signer will be financially responsible for it. They are in affect putting their name on the loan as much as you are – except they don’t get any benefit. This method is often used by people to get lower rates on mortgages and other forms of finance. The problem is that you can end up destroying someone else’s finances and credit score. For this reason, you need to be extremely confident that you will be able to meet your financial commitments.

Having a co-signer is a solid way to get a lender to give you the money that you’re looking for. The only downside is that it puts potential blame on third-parties. Getting a secured loan is much better for those who don’t want to put others at risk. Secured loans will allow you to take full responsibility for your financial decisions.

Who Offers Secured Personal Loans?

If you’re looking to get a secured personal loan, you have a variety of options at your fingertips. The place you opt to get your personal loan from will depend on your preferences. We will explore your two main options in further detail below. Make sure to consider what you’re looking for from a lender before you decide who to go with.

Brick-and-Mortar Lender

This is the original form of lender – this is mainly made up of banks and other lenders that have a physical presence. You can go into their branches and have a meeting with a lending specialist. People who want to have an in-depth discussion regarding their loan are most likely best to go with this option. While it is becoming more and more uncommon to use these lenders, many people still prefer working with their lender directly. These types of lenders also tend to offer more options when it comes to securing loans.

Online Lenders

Online lenders have been busy disrupting the market. There are hundreds of online lenders available for you to choose from. The application process is extremely simple and takes much less time than with traditional lenders. You’ll have to make sure that the online lender you choose offers secured personal loans, some will only offer unsecured personal loans. The main advantage of using an online lender is that you have many more options. There are so many small online lenders working in the industry at the moment – you can shop around for different rates and choose a lender that’s perfect for your situation.

What to Avoid When Searching for Secured Personal Loans

If you’re new to the lending industry, it’s important that you learn how to avoid working with certain companies that might not have your best interests at heart. If you’re planning on getting a secured loan, it’s very important that you make sure to be an aware borrower.

You should always make sure to look up lenders that you are thinking of working with on various consumer watchdog groups. These are the best sources for helping people determine if a lender is worth working with. You don’t want to work with a lender that has a sub-par reputation in the industry. Customer experience is a much more valuable component of the lending process than you might think. Working with a horrible lender can end up having profound effects on your mental health.

Another thing to look out for is predatory lenders. Because you’re securing your loan, you shouldn’t be paying a large amount of interest. Securing a loan typically results in you having extremely low interest payments. So, make sure to look out for companies that still want to charge you high interest rates if you’re going to secure the loan. These companies will try and lure you in with the promise of quick and easy capital, but this is a big red flag. If you end up having to pay high interest rates on money you’ve borrowed in a secured loan, you could end up defaulting and losing the asset that you’ve secured the loan with.


After reading this article, you can probably tell there are both advantages and drawbacks associated with securing a loan. It’s important that you weigh these various components up before you make any decision on the type of loan you get. Making the right financial decisions is the best way to ensure financial success in the future. And the best way to make the right decisions is to ensure that you’re constantly informed.

Choosing a lender to work with can often be the most difficult part of the process. There are hundreds of online and brick-and-mortar lenders operating in the personal loans space, it can be difficult to determine who is best. We’ve provided our readers with a list of the best secured personal loans companies available in the United States. Head to our homepage if you’d like to see who we recommend. We provide non-biased referrals to help our readers get a head start in the lending process.

Never sign up for the first loan you look at, you should always compare interest rates before applying. Remember, each time you apply for finance, your credit score will take a hit. That’s why it’s important to make sure that you choose a solid lender before you apply. You don’t want to make multiple applications over a short period of time.