What can be used as collateral for a secured loan?

Common collateral includes vehicles (auto title loans), real estate (home equity loans), savings accounts, certificates of deposit (CDs), or investment accounts. The collateral value typically needs to exceed the loan amount.

What happens if I default on a secured loan?

If you default on a secured loan, the lender can seize and sell your collateral to recover the loan amount. This could mean losing your car, home, or other pledged assets.

Are personal loans typically secured or unsecured?

Most personal loans from online lenders and banks are unsecured, meaning no collateral is required. However, secured personal loan options exist for those with poor credit or seeking lower rates.

Which loan type is better for debt consolidation?

Both can work for debt consolidation. Unsecured personal loans are most common and don't put assets at risk. Secured loans (like home equity loans) may offer lower rates but put your home at risk.

Secured vs Unsecured Loans

Compare secured vs unsecured loans. Learn which loan type is right for you based on collateral, rates, and risk factors.

Check Your Rates

🔐

Secured Loan

Lower interest rates
Higher borrowing limits
Easier approval with bad credit
Longer repayment terms available
Can help build credit
Requires collateral (car, home, savings)
Risk of losing asset if you default
Longer approval process
Asset valuation required

Best For:

Large purchases, bad credit borrowers, and those seeking the lowest rates

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Unsecured Loan

No collateral required
Faster approval process
No risk of losing assets
Simpler application
Good for smaller amounts
Higher interest rates
Lower borrowing limits
Stricter credit requirements
Shorter terms typically

Best For:

Those with good credit, smaller loan amounts, and quick funding needs

Side-by-Side Comparison

Feature	Secured Loan	Unsecured Loan
Collateral Required	Yes	No
Interest Rates	Lower (3-15%)	Higher (6-36%)
Credit Requirements	More flexible	Stricter
Approval Speed	Slower	Faster
Loan Amounts	Higher ($5K-$100K+)	Lower ($1K-$50K)
Risk to Borrower	Asset at risk	No asset risk
Best For Bad Credit	Yes	More difficult

Frequently Asked Questions

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