APR 5.99% – 35.99%·$100 – $50,000

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Head to head

Secured vs unsecured loan.

A secured loan is backed by collateral, an asset the lender can seize on default. An unsecured loan is backed only by your promise to repay. Secured loans usually cost less, but the downside if you can't pay is concrete and physical, not just a credit-score hit.

Side by side

Secured loan vs Unsecured loan

AttributeSecured loanUnsecured loan
Collateral requiredYes (car, home, savings account, etc.)No
APR range (typical)Often 3-12% lower than unsecured for the same borrowerHigher to compensate for lack of collateral
Common examplesMortgage, auto loan, HELOC, pawn loan, secured personal loan, share-secured loanPersonal loan, credit card, student loan
Loan amountOften 50%-85% of collateral valueBased on credit + income, typically up to $50,000 for personal loans
Default consequenceLender repossesses/forecloses on collateralCollection, credit damage, possible lawsuit and wage garnishment
Credit-score impactSimilar reporting; on-time builds credit, default damages itSame, both report to bureaus
UnderwritingCollateral value reduces lender risk → easier approval for marginal creditCredit, income, and DTI drive approval
Best forLarge amounts at the lowest possible APR, or borrowers with thin credit but solid collateralSpeed and flexibility, no asset on the line
Verdicts by scenario

Which wins, when.

  1. 01

    Buying a car or a house

    Winner: Secured loan

    These products are virtually always secured and at significantly lower APRs than unsecured alternatives.

  2. 02

    Small short-term expense, want speed

    Winner: Unsecured loan

    Unsecured personal loans fund in days; secured loans require asset valuation that adds time.

  3. 03

    Thin or bad credit, but you own a paid-off car

    Winner: Secured loan

    A secured personal loan or auto-equity loan can unlock cheaper APRs than an unsecured offer for the same borrower. Trade-off: you lose the car if you default.

  4. 04

    Worried about job stability or income volatility

    Winner: Unsecured loan

    Defaulting on unsecured debt is a credit-and-collection problem. Defaulting on a secured loan can mean losing the asset itself. If you'd be devastated to lose the collateral, the lower APR isn't worth it.

Common questions

Frequently asked.

Is a credit card secured or unsecured?+

Most are unsecured. A secured credit card requires a cash deposit equal to (or near) your credit limit; it's designed for credit rebuilding and behaves like an unsecured card once you've established history. Standard rewards cards are unsecured.

Can I get a secured personal loan?+

Yes. Some lenders offer secured personal loans backed by a vehicle, savings account, or CD. APRs are usually meaningfully lower than unsecured offers. Common with credit unions (share-secured loans against your own savings).

What happens if the collateral value drops below the loan balance?+

You're now 'underwater'. The lender can still foreclose/repossess and pursue you for the deficiency in many states. For unsecured loans, there's no collateral risk, but the higher APR essentially prices that lender comfort in.

Are student loans secured?+

Federal student loans are unsecured. Most private student loans are also unsecured. Defaulting on federal student loans triggers wage garnishment and tax-refund offset under separate statutes; defaulting on private student loans triggers standard collection processes.

Other comparisons

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