How to Get a Secured Personal Loan With Bad Credit

By Larry Parr

  • Overview

    Regardless of your past credit history, most lenders, including most banks, will be happy to give you a personal loan as long as the loan is 100 percent secured. Loans can be secured with assets like a savings account, CDs or other such instruments, or with real estate, cars, boats and other assets that the lender considers liquid (easily turned into cash). Count on being required to put up collateral equaling 100 percent (or slightly more) of the value of the loan you are receiving. Taking out a secured personal loan and paying it back on time (or early) is one way to repair a bad credit report.
    • Step 1

      Assemble your collateral. Collateral can be money in a savings account or a certificate of deposit (CD), a money market fund, a mutual fund or some other cash equivalent. Collateral can also be a boat, a car or a house that has more equity value than the amount of the loan you are asking for.
    • Step 2

      Visit a loan officer in person. Bring evidence of the value of your collateral. If you are using a savings account or other cash-equivalent collateral, offer to deposit the collateral with the loan officer.


    • Step 3

      Listen to the loan officer's offer. Don't take the loan unless you can live with the interest rate, the term (length of the loan) and the monthly payments. Understand that if you forfeit on the loan, the financial institution will own your collateral. Generally speaking, you can expect to get a good interest rate as long as your loan is 100 percent secured, regardless of your past credit history.
    • Step 4

      Pay back the loan on time, or early if possible. Some people take out a secured personal loan with the intent to hand back the loan proceeds (with interest) within 30 days, simply as a way of re-establishing credit.
    • Skill: Easy
    • Tip: If your goal in taking out a secure personal loan is to re-establish your credit rating, do not use the loan proceeds and simply hand them back, along with 1 month's interest, in 30 days. Taking out a loan and paying it back early looks good on your credit report, and can help to repair a poor credit report.
    • Warning:
    • Never take out a loan unless you know ahead of time exactly how you are going to repay it and how long it is going to take.
    • Do not accept a loan if you can't live with the terms.

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