What Can You Use as Collateral for a Secured Personal Loan

Property, vehicles, bonds, stock, jewelry, boats, fine art, collectables, antiques, paychecks, life insurance policies, savings in certificate deposit accounts, and savings accounts are some of the many assets that can be used as collateral to secure a loan. Almost any personal property of value can be used as collateral and borrowers would need to sign off on them when applying for a secured personal loan. If the borrower defaults on the loan, the lender will seize the collateral as a form of payment. Before you take out any secured personal loan, it’s important to understand what exactly you are signing up for and what kind of things you can pledge as collateral.

What Can You Use as Collateral for a Secured Personal Loan

What is collateral?

Collateral is personal property or asset that you pledge to a lender to secure a loan. As we mentioned above, homes, bonds, jewelry, vehicles, insurance policies, and savings accounts can be used as collateral. In some cases, you might also be able to use land as collateral. The collateral secures the loan and in case you default on it, the lender has a right to seize the collateral. Do all personal loans require collateral?

Some personal loans require you to pledge collateral, but most personal loans are unsecured. However, unsecured personal loans have stricter criteria for qualification as compared to secured personal loans. If you have a low credit score or a small credit history, you may face some difficulties with unsecured personal loans.

Since collaterals reduce the risk to lenders, borrowers with low credit scores will have an easier time qualifying for secured personal loans. An alternate option that you can look into if you have a bad credit score is a share secured loan.

Types of collateral you can use as a pledge:


If you are a homeowner, you can use your home as collateral when applying for a secured personal loan. Using your home can enable you to borrow a large amount against the equity in your home. Some lenders may even allow you to borrow 80% of the equity in your house. But this can be risky because if you aren’t able to pay off the debt, you can lose your home to foreclosure.


If you own a motor vehicle, you can use that as collateral for secured loans, such as title loans. It can provide you with quick cash and the process is relatively straightforward. However, lenders require the borrower to have full ownership of the vehicle. If it’s on finance and you don’t own it fully, it might not be eligible as collateral. Lenders usually let borrowers take out an amount up to 50% or less of the vehicle’s value. As with any other secured loan, the vehicle will be repossessed by the lender if you fail to pay off your debt.


Jewlery made with precious metals and gemstones such as engagement rings, gold or diamond jewelry, and luxury watches can be used as collateral too. These types of secured personal loans can provide you with a large amount of money for your personal needs. Lenders who accept jewelry as collateral may include pawnbrokers too who provide short-term loans. Banks might also accept jewelry if it’s of high value.


Bonds can get you quick cash for large purchases. Most lenders accept municipal bonds, corporate bonds, and treasury bonds as collateral, but some lenders may not accept corporate bonds. Treasury bonds are backed by the federal government and hence are considered a safe option. Municipal bonds may pose some risks but are generally considered to be a safer option than corporate bonds. If you default on the loan, the lender will sell your bonds in place of payment.


There are so many things that can be used as collateral. If you are looking for a secured personal loan, you should consider some factors before making any decision. How much money do you need, and what asset can be used as collateral? You should also have a repayment plan in mind to avoid defaulting on the loan. Every type of collateral has its pros and cons, so only you can decide which one would be best for your circumstances.

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