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What Types Of Secured Loans Are Good For People With Bad Credit?

Secured loans are quite different than unsecured loans and come with their own risks and opportunities, which is why it’s important to understand the types of secured loans available to you and how they can impact your credit.

Generally, title loans are the best option for people with bad credit, since they allow you to use your car title as collateral for the loan rather than having to prove your creditworthiness. Title and Payday Loans can help connect you with the right lender for your needs.

While there are several types of secured loans available, not all loans are created equal. That’s why a little loan-savviness goes a long way. In this article, we’ll help you understand your options and which one is best in a financial emergency.

The Difference Between Secured And Unsecured Loans

First, some definitions of terms. A secured loan is collateralized, meaning that it is secured by a valuable asset. Often with loans, the collateral is the asset being financed: a car, a home, or other valuable collectibles that a borrower pledges.

If the borrower defaults, the lender can assume ownership of the asset to recoup the remaining balance. As such, secured loans offer much less risk to lenders than unsecured loans, which are signed and sealed only on the promise of the borrower and their creditworthiness.

Generally, interest rates on secured loans are lower.

types of secured loans for bad credit

What Can Be Used As Collateral?

Depending on the context of the loan, different items can be used as collateral. That might include real estate, equity in an asset, bank accounts, investments, insurance policies, vehicles, or valuable collectibles.

Mortgages, for example, are used to finance the purchase of a home by securing the loan with the property itself, giving the lender the option to foreclose in the event of a default.

With a title loan, the lender holds the title to the vehicle until the loan is repaid according to the agreed-upon terms.

Types Of Secured Loans For Bad Credit

By nature, any secured loan is preferable for those with bad credit, as they indicate less risk for the lender and are thus much less credit dependent. Still, it’s important for borrowers to consider their ability to repay the loan, since having bad credit doesn’t indicate a good track record with debt.

With that in mind, one type of secured loan for people with bad credit is a title loan, which gives you a sum of money by using your vehicle title as collateral. You will repay the loan in monthly installments and recover your title once it’s paid in full.

Still, each loan type comes with risk, and determining whether a title loan is right for you consists of three factors:

  • Your circumstances
  • Your ability to repay
  • The right lender


Your circumstances are preeminent in determining whether these types of secured loans are right for you. If you’re not facing an emergency, you don’t need a loan. Used for frivolous purchases, any type of loan is detrimental to your financial well-being. Consider only using a title loan in the following or similar circumstances:

  • You need to conduct urgent repairs
  • You have costly medical bills to pay
  • Rent or utilities are due
  • You have urgent business travel

Ability To Repay

Similarly, you should consider your financial stability before taking out a loan. You will be obligated to make monthly payments on the loan to the total amount you borrowed, plus interest.

One of our vendor’s representatives can help you understand the specifics of your obligations, but it’s important to put your finances into perspective and plan a course of action before making a loan decision.

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The Right Lender

Lastly, you’ll want to make sure you’re partnering up with the right lender to help you get the best title loan for your needs. That’s where Title and Payday Loans can help. We work with title loan vendors across the country to help you get the urgent cash you need.

To get started, fill out our quick request form, and we’ll connect you automatically with the right lender near you. They’ll then give you a call to set up an in-person meeting. Bring your ID, lien-free title, and car to the meeting for a quick vehicle inspection that will determine the value and how much you can borrow.

If you’re approved, you can get up to $15,000 to put toward your emergency.

Get Started Today!

Secured loans are, by nature, good for people with bad credit, but understanding which types of secured loans are best can be challenging.

All in all, a title loan is a good secured loan for those with bad credit, and Title and Payday Loans can connect you with the perfect vendor for your needs. Ready to get started! Fill out our quick request form today to see how much you could qualify for!

Note: The content provided in this article is only for informational purposes, and you should contact your financial advisor about your specific financial situation.

Daniel Dewitt

Daniel Dewitt is a lifetime blogger with a finely-honed ability to break down, analyze, and interpret economic trends for the layman. He's fiercely invested in spreading financial literacy and helping everyday people gain the tools they need for their own economic success.

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