If you’re struggling to get a loan with bad credit, a secured loan can be a more accessible option that’s much easier to qualify for. Because secured loans are secured with a piece of valuable collateral, like a home or a car, they’re a safer bet for lenders. This can help you to qualify for more loan options, even if your credit score isn’t where you want it to be.
For the same reason that secured loans are more attractive to lenders, this type of loan can also be riskier for consumers. This is because, if you fail to make timely payments on your loan, the lender can repossess your property.
However, even though secured loans come with one major downside, they make up for it in low interest rates, few fees, and clear terms.
What’s Ahead:
Overview of the best secured loans for bad credit
Lender Best for Loan amount APR Term
OneMain Secured and unsecured loans $1,500 to $20,000 18.00% - 35.99% 24 to 60 months
Avant Fast funding $5,000 to $25,000 9.95% - 35.99% 24 to 48 months
Finova Financial Quick decisions Varies Up to 30% 12 months
Regions Bank Small loans Starting at $250 Varies Varies
First Tech Federal Credit Union Savings secureed $25,000 to $1,000,000 Savings account rate plus 3.00% 60 to 96 months
Oportun No credit history required $300 to $10,000 Up to 26% 24 months or more
OneMain
OneMain Financial offers secured personal loans that can cover everything from debt consolidation to home improvement projects and more. In addition to traditional personal loans, OneMain also allows you to take out a secured loan using your vehicle as collateral, with interest rates generally lower on their secured loans than unsecured loans.
Fees and interest rates
A secured loan from OneMain Financial features an APR range of 18.00% to 35.99%. OneMain does charge an origination fee for these loans that will vary depending on what state you live in. You may be charged a flat fee ranging from $25 to $400, or a percentage-based fee ranging from 1% to 10% of your loan amount.
OneMain Financial also charges late fees. Again depending on your state, fees can range from a flat fee of $5 to $30, or a percentage-based fee of 1.5% to 15%. Non-sufficient fund fees range from $10 to $50.
Loan limits and terms
You can borrow between $1,500 and $20,000 from OneMain Financial. This flexible loan limit amount means that a secured loan from OneMain can meet a wide variety of needs, whether you need a small loan for an emergency expense or a larger loan for a long-term project. Term lengths vary, with options including 24, 36, 48, or 60 months.
Learn more about OneMain or read our full OneMain review.
Avant
Secured loans from Avant feature a quick and easy application process and fast funding. Loans are secured using a vehicle, and borrowers can access loan amounts ranging from $5,000 to $25,000. You can apply online in a matter of minutes, and see if you prequalify without even affecting your credit score.
There’s no need to visit a physical bank branch or lender’s office, so you can apply from the comfort of your own home.
Fees and interest rates
A secured loan from Avant has an APR range of 9.95% to 35.99%. What APR you qualify for can depend on a variety of factors, including your credit score, loan amount, and loan term range. Fees include a late fee of $15, a dishonored payment fee of $20, and an administrative fee of 2.5% of the loan amount.
Loan limits and terms
Borrowers can take out a loan ranging from $5,000 to $25,000 from Avant, with term lengths from 24 to 48 months. A secured loan from Avant is a great alternative to a traditional title loan, with longer repayment terms and more favorable rates in some cases.
Learn more about Avant or read our full Avant review.
Finova Financial
Finova Financial is a fintech company founded in 2015. They offer financial products including consumer loans on car (CLOC) as well as prepaid cards. Their secured loan uses your vehicle as collateral, and you can qualify even if you don’t have good credit.
Finova also features an all-online application process, a same-day decision on your application, and quick funding.
Fees and interest rates
A loan from Finova has a maximum APR of 30%, which is slightly lower than many of the other lenders on this list. The loan comes with a $75 DMV Lien Fee as well as a Document Stamp Tax fee that varies depending on the loan amount. There’s no prepayment penalty, so you can pay off the full balance of your loan at any time.
Loan limits and terms
All Finova secured loans have a term limit of 12 months. This term limit is somewhat less flexible than many of the lenders on this list. This can be a downside if you’d prefer a longer-term limit with lower monthly payments, but it can also be a benefit if you’re looking to pay your loan off more quickly. Loan amounts vary based on the value of your vehicle.
Regions Bank
A secured loan from Regions Bank is unique in that you need a Regions Bank savings account in order to qualify. The loan can be secured with a savings account, CD, or money market account. The idea is that you can borrow against money that you already have saved up.
If you’re already a Regions customer, it’s easy to apply. If you don’t yet have a savings account with Regions, you can open an account online within a few minutes. These secured loans are also unique in that they feature very small minimum loan amounts, starting at just $250. This makes Regions a great option if you find yourself in a tight spot financially and need to borrow just a small amount of money.
Fees and interest rates
The fixed APR for this loan varies depending on the loan amount and the type of collateral you use to secure the loan. Late fees are 5% of the unpaid loan payment amount or $100, whichever is less. Depending on the size of your loan, you may also be charged a loan processing fee.
Loan limits and terms
Regions offers secured loans with low minimum limits. For loans secured by a savings account or money market account, minimum limits start at just $250 and can range up to 100% of the verified deposit account balance.
Loans secured with a CD have a minimum limit of $2,000 and a maximum of 100% of the verified deposit account balance. Term lengths vary depending on the loan amount and the collateral you choose to use.
Learn more about Regions Bank.
First Tech Federal Credit Union
First Tech Federal Credit Union offers several different kinds of secured loans, including Stock Secured Loans, Certificate Secured Loans, and Savings Secured Loans. The idea behind these loans is that you can borrow against your investments and savings for a wide variety of expenses, including debt consolidation, medical bills, taxes, or other expenses.
In order to qualify, borrowers first need to have a First Tech Share Certificate, savings account, or own stock. First Tech also features a simple online application process and low fees.
Fees and interest rates
Fees and rates vary depending on the type of secured loan you take out from First Tech. Stock Secured Loans have an APR starting at 4.5% to 5.1% depending on your term length. A Savings Secured Loan is based on the savings account rate plus 3%. A Certificate Secured Loan rate is based on the certificate account rate, also plus 3%.
Fees vary depending on the type of account you use to secure the loan, but First Tech charges no application, origination, annual, or refinancing fees. There’s also no prepayment penalty, so you can pay off your loan whenever you choose.
Loan limits and terms
Loan limits and terms also vary depending on what type of account you use to secure your loan. For a Stock Secured Loan, loan limits range from $25,000 to $1,000,000 and term limits range from 60 to 144 months.
For a Savings Secured Loan, loan limits range from $500 to $500,000 and term limits range from 60 to 96 months. For a Certificate Secured Loan, loan limits range from $500 to $500,000 and the term limit is based on the time until certificate maturity.
Learn more about First Tech Federal Credit Union.
Oportun
Oportun offers secured personal loans even for borrowers with poor credit or little to no credit history. It’s easy to apply online, and you can find out whether or not you qualify for a loan in just a few minutes. A secured loan from Oportun uses your car as collateral, and features fixed monthly payments and lower rates than many alternative lenders.
Oportun also reports your activity to national credit bureaus to help you build up credit history. Oportun does require up to four references in order to apply, which is an unnecessary hurdle for some borrowers.
Fees and interest rates
APRs are capped at 36%, and returning customers in good standing can qualify for lower rates. There are no prepayment penalties, so can you pay off your loan at any time.
Loan limits and terms
Loan limits range from $300 to $10,000, and loan term lengths start at 21 months. Oportun advertises its secured loans as an attractive alternative to traditional title loans and loans from payday lenders, and claims that customers save an average of $1,000 on their first personal loan compared to other alternative lenders.
How we came up with this list
When putting this list together, we looked for lenders that were accommodating to borrowers with less than perfect credit. Some of the lenders on this list appeal specifically to borrowers with poor credit, while others are available to borrowers if they have a particular type of asset able to secure the loan, such as a car or savings account.
In addition, we looked for lenders that featured easy online applications, ideally with the ability to prequalify. Plus, we wanted to make sure that these lenders are flexible in terms of both the loan amount and the term limit, allowing borrowers to choose the terms that work best for them.
Lastly, we wanted to include companies that offer fast funding. Many of these lenders can provide funding in just a day or two, allowing borrowers fast access to the funds they need.
How to get a secured loan with bad credit
While it can be difficult to qualify for an unsecured loan with bad credit, secured loans are easier to qualify for, since they’re secured by a piece of collateral that a lender can repossess if you’re unable to pay back the loan. This makes lenders more likely to accept applications even from borrowers with poor credit.
To apply for a secured loan, you’ll need to provide some information about yourself, your financial situation, and whatever piece of collateral you’re using to secure the loan. This typically includes information like your name, address, and proof of income. If you’re securing your loan with a vehicle, you may also need to provide information including your driver’s license, car title, and car registration.
Is a payday loan a better idea?
No!
If you need cash fast but don’t have the credit score required to qualify for a traditional personal loan, you may have considered taking out a payday loan instead. While payday loans are generally easy to qualify for and provide fast access to cash, I don’t recommend them for several reasons. Payday loans typically employ predatory lending practices, are extremely expensive, have high interest rates, short-term lengths, and can trap you in a cycle of debt that’s difficult to escape from.
If at all possible, you should steer clear of payday loans. If you’re having trouble qualifying for a loan, a secured loan is a better alternative that generally provides lower rates, fewer fees, and longer term lengths, allowing you to pay off your loan sustainably over time.
The most important things to know about secured loans for bad credit
If you’re considering taking out a secured loan, there are a few things you should keep in mind:
- If you can’t pay off your loan, you may lose your collateral. Lenders can seize your collateral, such as a vehicle or savings account if you’re unable to pay your loan.
- Secured loans are easier to qualify for. Because secured loans are backed by collateral, they’re generally easier to qualify for than unsecured personal loans, and are available even to borrowers with poor credit.
- You may be able to prequalify. Many lenders allow you to prequalify before submitting an application, which can protect your credit score from hard inquiries.
- Make sure to make your monthly payments. While failing to pay off an unsecured loan can tank your credit score and wreak havoc on your finances, failing to pay a secured loan means that you could lose valuable property such as a car or savings.
Summary
If you’re not able to qualify for an unsecured personal loan and need access to cash, a secured personal loan is another good option. Secured loans require borrowers to leverage collateral such as a vehicle or savings account in order to take out a loan. This means that there is less risk for the lender, but greater risk for the borrower. If you’re unable to pay back your loan, the lender can seize your collateral. This means that it’s especially important to make on-time payments if you do take out a secured personal loan.
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