What is a secured personal loan?

Financial education, Loans

A secured personal loan is a loan backed by something of value that you own, also called collateral. Many types of assets can be used as collateral, such as your car or home. Because of the collateral, lenders take on less risk and can offer better pricing or larger loans.

According to the Consumer Financial Protection Bureau, collateral is an asset that secures a loan or other debt.

How does that benefit me?

There are three major benefits to securing your loan with collateral. Because a secured loan reduces the risk for the lender, many lenders can:

  • Approve you for a loan when they otherwise wouldn’t—even if you have little to no credit history
  • Offer you a larger loan amount so that you can do more with your money
  • Provide better loan terms, such as lower interest rates, than with an unsecured loan, which can save you money in the long run

Some lenders (like Oportun) offer additional benefits such as:

  • 21+ months to pay your loan off
  • Fixed, affordable payments
  • No prepayment penalties or balloon payments
  • Help establishing the credit history you need to unlock more opportunities in the future

How do secured personal loans work?

When you secure your loan, your lender often puts a lien—or a claim—on your collateral in case you don’t pay the loan back. But this doesn’t impact your daily life. For example, if you use your car as collateral, you still get to keep and drive your car while you pay the loan back.

Once your loan is paid off, the lien is released. However, if you can’t make your payments and default on your loan, your lender could take your collateral to reduce the amount you owe.

Traditional title loans are different

If you’re thinking, “This sounds like a title loan,” it’s not. There are two major differences with Oportun.

    1. Terms: A secured personal loan is long-term installment loan that is typically paid back in 24 months or more. A title loan is a short-term loan that is normally repaid in 30 days.
    2. Price: The APR for secured loans is usually limited to 36%. Title loans often collect triple-digit financing.

What does this mean for you? Secured personal loans give you more time to complete your payments than title loans, making them more budget-friendly. And you can set one up just as quickly.

How do I know if a secured loan is right for me?

A secured personal loan can be easier to get—even if your credit score is low or you have no score at all. This is a huge plus if you are just starting to establish credit history and find that traditional lenders won’t help you.

Plus, no one knows your situation better than you do. Lenders only have a look into your past through your payment history—they don’t know how your situation may be changing. You’re the only one with a full look at your income and expenses. If you’re confident in your future budget, a secured loan may be a great option to get the loan you need at an affordable rate.

Secured personal loans at Oportun

Depending on your situation, some customers will qualify for a secured loan. With a secured loan, you’ll likely be offered more money at a lower APR with more time to pay it off.

Both types of personal loans offer you fixed, affordable payments. And we always report to national credit bureaus to help you establish credit history. Learn more about Oportun’s secured personal loan terms.


The information in this site, including any third-party content and opinions, is for educational purposes only and should not be relied on as legal, tax, or financial advice or to indicate the availability or suitability of any Oportun product or service to your unique circumstances. Contact your independent financial advisor for advice on your personal situation.

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