Do personal loans require collateral?
No, most personal loans are unsecured (no collateral required). The lender relies on your credit and income to underwrite. Some lenders offer secured personal loans backed by a vehicle, savings account, or CD; these typically come with lower APRs but put the collateral at risk.
Context
Standard personal loans from mainstream U.S. lenders are unsecured. The lender's recourse if you default is limited to credit reporting, collection efforts, and (in some cases) lawsuit and wage garnishment. They cannot repossess a specific asset.
Secured personal loans exist but are less common. Common collateral types: vehicle title (similar to an auto loan but for general personal use), CD or savings account at the same institution (share-secured loans, common at credit unions), or investment account assets.
Secured loans typically carry APRs 3-8 percentage points lower than unsecured loans for the same borrower. The trade-off is real default risk: if you can't repay, you lose the collateral. For borrowers with strong cash flow and a useful asset (paid-off car, large CD), a secured loan can be substantially cheaper.
- Reviewed by
- Compliance Review
- Last reviewed
- May 22, 2026
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