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While the economy has made a full recovery since the big recession of 2008, many consumers still find it hard to obtain the credit they need. Unsecured personal loans are even harder to come by and require near perfect credit even though many consumers need the money to pay off other bills, for emergencies or simply to take a vacation.

Secured personal loans offer the best alternative to unsecured loans.

What is a Secured Personal Loan?

Simply put, a secured personal loan is a personal loan that requires some type of collateral before the bank gives you money. In most cases, this collateral is in the form of a car. Depending on your borrowing history, the bank could lend you up to 100 percent of the value of the collateral.

In most cases, the maximum interest rate on a secured personal loan is 36 percent. Lenders that are less than reputable have been known to charge as much as 300 percent. Other items that can act as collateral include property, cash assets like savings accounts and certificates of deposit, electronics and more.

Where to Find Secured Personal Loans

There are a variety of options available for people who need to take out a secured personal loan:

Traditional Banks – Traditional banks like Wells Fargo, Bank of America and Citibank offer secured personal loans to consumers. The annual interest rate can range from 5.99 percent to 25 percent depending on credit history.

Online Lenders – Online lenders offer an alternative to traditional banks. While the application process will likely be easier with less requirements, the lender will charge a much higher interest rate and might force you to sign an agreement that requires payments whenever you receive a paycheck. If you choose an online lender, perform plenty of due diligence first.

Credit Unions – Similar to traditional banks, many credit unions offer secured personal loans to their customers. The interest rates will probably be about the same and so will the application process. The major difference is that, in order to apply for a personal loan, consumers will need to be a member of the credit union, or qualify to become a member first.

What to Look out For

Secured personal loans can be tricky. Before signing any paperwork, make sure you know what the interest rate is, how many months you’ll have to pay back the loan and what the bank requires for equity. Read any fine print regarding late payment penalties and any consequences you might have to face if you skip a payment in the future.