Personal Loans with Collateral

A personal loan can help you cover just about any expense. Some personal loans require collateral, or a valuable item you own, like a house or car. Personal loans with collateral can be easier to qualify for and often come with lower interest rates. Here’s everything you need to know about personal loans with collateral.

What is a personal loan with collateral?

Personal loans with collateral are secured loans offered by banks, credit unions, and online lenders. If you take out a personal loan with collateral, you’ll need to offer collateral, which is some sort of property or asset. In the event you default on your loan, the lender will have the right to seize your collateral to recoup the loss.

Why do secured personal loans require collateral?

Secured personal loans require collateral because it reduces the lender’s risk. Lenders know that if borrowers fail to make payments on these types of loans, they’ll have the right to their collateral and can sell it to recoup their losses. This guarantee allows them to offer more favorable terms.

Types of collateral for secured personal loans

There are different types of collateral you may offer up when you take out a secured personal loan. Some common types of collateral include:

  • House
  • Car
  • Cash in a savings account
  • Cash in a certificate of deposit (CD)
  • Stocks and bonds
  • Insurance policies
  • Jewelry
  • Fine artwork
  • Antiques
  • Precious metals

Types of personal loans with collateral

Here are several examples of personal loans with collateral:

Title loans

A car title loan is a secured loan that uses your car as collateral. With this loan, you’ll give the lender your car title in exchange for a lump sum of money at once. The amount you can receive will be based on 25% to 50% of your vehicle’s value. You can continue to drive your car as you pay back a title loan.

Pawn shop loans

If you have a diamond ring, artwork, or other asset, you can take it to a pawn shop and walk out with cash in minutes. Since pawn shop loans don’t involve a long application process or credit check, they offer a quick way to borrow money. Your loan amount will be based on the value of the item you choose to pawn.


A mortgage is a loan you get from a lender to finance a home. When you take out a mortgage, you promise to repay the money you’ve borrowed plus interest over an agreed upon term that is usually 15 or 30 years. Your home serves as collateral so if you default, the lender can foreclose on your property.

Home equity lines of credit (HELOCs)

With a HELOC, you can leverage your home’s equity (the difference between what you owe on your mortgage and what your home is currently worth) to meet your financial goals. It’s similar to a credit card because you’ll be able to borrow as much or as little as you’d like up to a set credit limit.

Pros and cons of getting a personal loan with collateral

Collateral personal loans are easier to get if you don’t have great credit. Compared to unsecured loans, these loans typically come with lower interest rates and larger loan amounts. You can also use them to build or improve your credit.

But just like all financial products, collateral loans do have a few drawbacks. You can expect a longer application process that involves sharing the details of your collateral. In addition, you’ll have to put your asset on the line as the lender can seize it if you fail to make your payments.

What you’ll need to qualify for a personal loan with collateral

To get approved for a personal loan with collateral, you’ll need the following:

  • The asset you’ll provide as collateral
  • Proof of identity in the form of a driver’s license, passport, birth certificate, or Social Security card
  • Employer and income verification with pay stubs, tax returns, and bank statements
  • Proof of address, like a utility bill, lease agreement, or mortgage statement

Get a personal loan with collateral today

Advance America offers title loans that can allow you to receive your funds the same day you apply. All you have to do is fill out a short online application form and visit a nearby Advance America location to get your vehicle appraised. Your loan amount will be based on your car’s value, and you can continue to drive your vehicle as you repay your loan.

The Advance America advantage

Since 1997, Advance America has helped millions of hardworking people with a variety of financial solutions including Payday Loans, Online Loans, Installment Loans, Title Loans and Personal Lines of Credit.
148+ million
loans issued
900+ stores
and online loans
25+ years
providing loans