What can be used as collateral for a personal loan? This question is about Personal Loans

What can be used as collateral for a personal loan?

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This question is about Personal Loans

Adam McCann, Financial Writer

@adam_mccann • 07/29/19 This answer was first published on 07/29/19. For the most current information about a financial product, you should always check and confirm accuracy with the offering financial institution. Editorial and user-generated content is not provided, reviewed or endorsed by any company.

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You can use anything that holds value as collateral for a personal loan, as long as that value matches or exceeds the loan amount and will be accepted by the lender. Common forms of collateral for a personal loan include things like cars, investments, real estate and more. Each lender has its own collateral requirements, however. For example, some lenders might only accept vehicles for collateral.

What can be used as collateral for a personal loan:

Cars
Boats
RVs
Trailers
Cash in a savings account
Investments
Future paychecks
Real estate
Art
Jewelry
Collectibles (e.g. coins)
and more.

Few major lenders will accept car titles, real estate or collectibles as collateral for a personal loan. Most only accept money in a savings or investment account. That means they’re more suited for people who want to use collateral to get lower interest rates than people looking to overcome question marks in terms of creditworthiness. But exactly which forms of collateral will be accepted varies from lender to lender.

Personal Loan Collateral Requirements for Major Banks & Credit Unions

Lender	Car Title	Cash Account	Investment Account	Art/Jewelry/Collectibles
PNC	Yes	Yes	Yes	No
Regions Bank	Yes	Yes	No	No
Wells Fargo	No	Yes	No	No
TD Bank	No	Yes	No	No
Fifth Third Bank	No	Yes	Yes	No
KeyBank	No	Yes	Yes	No
Navy Federal Credit Union	No	Yes	Yes	No
First Tech Federal Credit Union	No	Yes	Yes	No

It’s important to keep in mind that not all personal loans require collateral. Only secured personal loans do. And these types of loans are more aimed at people with bad credit or people with average credit scores who want to get better rates or a larger loan amount. People with good to excellent credit should be able to qualify for good rates on an unsecured personal loan, which will not require any collateral.

If you take out a secured personal loan, be wise about the collateral you put up. Always be mindful of the fact that if you default on the loan, the lender uses your collateral for repayment.

Answer Question

What's the difference between a secured and unsecured personal loan?

Secured loans require you to surrender something of value to the lending institution as the collateral until the loan has been repaid. The collateral can be your car, your home, or other valuable personal property. If you are unable to repay the money, the lender will have the right to take possession of the collateral and sell it to recover their loss. ... read full answer

Unsecured loans do not require any collateral. So if you cannot repay the loan, the lender will not have any collateral to take possession of.

Because unsecured loans are riskier to lenders, often, it is harder for you to obtain an unsecured loan. Also, often the interest rate on unsecured loans is higher than with secured loans to compensate for the risk that the lender takes on.

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What is a secured personal loan?

A secured personal loan is a personal loan that requires the borrower to provide collateral to the lender. The collateral “secures” the loan because the lender can keep the collateral if the borrower is unable to pay back the loan. So there’s a lot less risk of the lender losing money than with an ... read full answer unsecured personal loan, which doesn’t require collateral.

The major benefit of a secured personal loan is how easy it is to get. A secured personal loan can often get you lower interest rates than you’d receive with an unsecured personal loan, as well. The downside is that you’re putting something valuable on the line. If you secure a loan with your car, for instance, defaulting on the loan would mean losing your means of transportation as well. It’s important to be aware of exactly how secured personal loans work before applying.

What is a secured personal loan? Fast facts:

A secured personal loan is a personal loan that requires collateral.

The lender can take possession of the collateral if you default.

The collateral usually needs to be at least as valuable as the amount you borrow. Some lenders might offer partially secured loans, where the collateral is worth less.

If you’re unable to pay back the loan, the lender will use the collateral to recoup amounts owed. Any excess amount will be returned to you.

It’s not difficult to get a secured personal loan with bad credit because the lender has low risk.

If you have good or excellent credit, you’re probably better off getting an unsecured personal loan. If you have bad-to-fair credit, you may still qualify for some unsecured loans, though your interest rates will be high. You’ll have to weigh those rates against the cost of putting down collateral for a lower APR.

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