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Secured Personal Loans for Bad Credit

Loans secured with collateral can be a great way for people with bad credit to borrow the money that they need.

A secured personal loan works like this: a person puts up collateral for the loan. If the loan is paid off they get to keep the collateral. If the loan isn’t paid the lender simply takes the collateral to cover their loss.

Since collateral is put up with a secured personal loan no credit check is needed. That means people with bad credit can easily get secured personal.


The most basic kind of secured personal loan is pawning, or hocking an item. That means you take something to the pawn shop and if it is valuable the pawnbroker will lend you money usually a percentage of the item’s value. In exchange, the pawnbroker keeps the item and takes possession of it if you don’t pay off the loan within a period of time usually ninety days.

Pawnshops can be found in almost any city and town and they will lend money on a wide variety of goods. Items pawned include tools, jewelry, musical instruments, electronics, cameras, knives, silverware, coins, china, firearms, antiques and collectibles to name just a few. One reason why pawnshops are popular is that they pay out cash immediately unlike some lenders.

One thing to remember is that the pawnbroker is in control. The pawnshop will determine if you get loan and how much you can borrow. The amount loaned is usually going to be considerably less than the items’ value. The pawnbroker does this so they can make a profit selling the item if you default on the loan.

Pawnshops will also buy certain items including gold and jewelry. The price they pay will be fairly low because the pawnbroker has to make money from them.

Auto Pawn

Another popular kind of secured personal loan for bad credit is auto pawn; auto pawn works just like a pawnshop, except you’re pawning your vehicle.

To pawn a vehicle such as a car, motorcycle, RV or truck you’ll have to have to own the vehicle outright. If you’re making payments on a vehicle you won’t be able to pawn it. You have to own the vehicle and prove you have clear title to it. Most pawnbrokers will require you to have a copy of the title for auto pawn.

You’ll probably have to have a running vehicle in good in good condition as well. So it’s doubtful that the pawnbroker will give you a loan on your broken down old clunker. As with regular pawnbrokers auto pawn brokers decide how much of a loan you’ll get. So you’ll probably get a lot more for your Cadillac than for your Chevy.

Most auto pawnbrokers lend you money on the title to the vehicle. Some will let you keep the vehicle if you agree to bring it back and turn it over to them if you can’t pay off the loan. In such deals the pawnbroker keeps the title to the car. You get the title to the vehicle back when you pay off the loan.

Others will make you leave the vehicle at their facility. They’ll let you drive away when you pay off the loan.

Secured Personal Loans for Bad Credit Private Individuals

Another kind of secured personal loan for bad credit is from a private individual. Instead of borrowing from a lender a person gives somebody they know such as a friend or family member some item as collateral.

The advantage to this is that a friend or family member might be willing to loan money at a low interest rate or charge no interest. An advantage to using collateral is that the relationship with the friend or family member won’t be destroyed if the borrower doesn’t pay the money back. Instead the lender can keep the collateral.

Secured personal loans are a great way for those with bad credit to borrow money. Persons with bad credit should always look into secured personal before going to more expensive sources of finance such as payday lenders.