Secured Loans For People With Bad Credit – Is It Possible?


Short answer, yes, it’s possible to get secured loans with bad credit score. Long answer, well, read on to find out as it can’t be explained that easy.

How to get secured loans for people with bad credit?

First and foremost, if you have bad credit or even worse no credit score at all, you might hit a wall when it comes to getting a secured loan because you’re viewed as a high-risk customer for the lender (banks and other financial institutions) as you might default and leave the lender without their prize known as the interest rate.

So, if you have been turned down multiple times when it comes to the loan and you don’t want to be stuck with high interest rates, there are some alternatives for you to try.

You have to understand loans

When it comes to payday loans and cash advances, be as careful as possible. Payday loans are defined as short-term, small-amount loans that are meant to be lent when an individual is short on cash.

They work like this; you write a check for the amount you want to borrow along with a fee for the loan and you leave it with the lender who will cash the check when you have the funds to pay. If you don’t pay on time, additional fees will pile up.

Unfortunately, payday loans come with a very high interest rate, up to 500-600% or even more. The AVERAGE interest rate that is charged for these loans is around 250%.

Think twice before you loan the money you need. Just because a lender will loan your money, it doesn’t mean you can afford it. It would be much wiser to take a loan from a bank since some “questionable” lenders are charging a massive interest rate. They are basically scamming you. After all, it all comes down to you and your ability to judge reasonably.


Secured vs. unsecured loans

As I already talked about what is the main difference between secured and unsecured loans, it’s worth repeating it. If you have a good credit history, you can choose to go with unsecured loan and fulfill your short-term financial needs. We’ve also said that unsecured loan requires no collateral from their borrowers.

On the other hand, we have people with bad credit history and they can only go with a secured loan since they are not a big dan of high interest rates. More so, secured loans require from a borrower to submit his or her asset as a form of collateral. An asset can range from a home, car, up to any sort of possession like a coin, jewelry, and rare collectibles.

4 options for obtaining secured loans for people with bad credit

Option #1: Credit Unions

If you would compare credit unions and banks, they are quite similar, but credit unions are owned by their members who have few things in common. For example, they usually work in the same industry or live in the same area. Also, credit unions are nonprofit financial institutions that pass along earnings to members in the form of lower fees and better customer service.

Some reputable credit unions are:

Options #2: Peer to peer loan

We already said that peer to peer loaning is quite risky and it is an online platform that is designed for you to borrow directly from an individual instead of from a financial institution.

Furthermore, P2P is growing in popularity because of the simple process that’s a win-win as well as for borrowers who pay really low-interest rates and for investors who earn really high interest rates.

You can borrow for as little as 6.7% and earn an average return of 10%. That is pretty impressive.

Also, the platform itself is safe as all lenders check all they can on the applicants as you credit history becomes a part of you loan listing. Since banks are not empathetic, a fellow individual investor might be.

Some of the reputable P2P lending sites are:

Option #3: Take a loan from family or friends

If none of those two options satisfy your answer, perhaps you have a family or close circle of friends who ae ready to lend you some money. When you take a loan from somebody you know, treat it like a serious business transaction that should be clearly documented.

If you want to act all business and avoid possible complications, you can draft a written agreement that includes all the necessary information such as the amount of interest rate, collateral (if any), etc.

All in all, when borrowing money from a family of friends, you should know that they should be your first resort because, in most cases, they won’t really care about the interest rate or a collateral. In any case, be sure to return the money, as losing a friend or a family member over money is not worthy.

Option #4: Credit counselors

Sometimes you are all alone, and sometimes it can be very encouraging for you both financially and emotionally to have someone on your side as you try to rebuild your credit score.

Let me introduce to your credit counselors.

Two business men shaking hands at international business meeting.

They offer special service that help you rebuild your budget, negotiate the term of your credit and they even create a repayment plan. In the end, their ultimate objective is to help you eliminate debt and ensure you financial safety. Of course, they come at a price.


When taking a loan, be sure to evaluate all the terms of payment they are offering as sometimes, the “gems” are hidden in the fine print. In the end, you’ll want to find a lender that knows your credit score and you’ll need to make you sure that you know what kind of loan you are taking. Not all people are fair and square, there are loans to avoid.

Disclaimer: I am not affiliated with any of these companies mentioned in the article nor I receive any sort of revenue for mention them.



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