Are personal loans secured or unsecured?
Most are unsecured (no collateral required). Some lenders offer secured personal loans backed by a vehicle, CD, or savings account, which typically come with lower APRs but put the collateral at risk if you default. Standard mainstream personal loans are unsecured.
Context
An unsecured personal loan relies entirely on your credit and income for underwriting. The lender's recourse on default is limited to collections, credit reporting, and possibly a lawsuit. They cannot repossess specific property.
Secured personal loans backed by collateral exist but are less common. Common collateral: a paid-off vehicle (auto-equity loan), a savings or CD account at the lender (share-secured loan), or investment account assets. Secured personal-loan APRs are typically 3-8 percentage points lower than unsecured equivalents at the same credit tier.
The trade-off is concrete: lower APR for the lender's improved recovery position. Use secured personal loans when you have a useful asset, stable cash flow, and would rather pay less interest than carry collateral risk.
- Reviewed by
- Compliance Review
- Last reviewed
- May 22, 2026
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