What Collateral Is Needed for a Personal Loan?

A personal loan that requires collateral is known as a secured loan. Collateral is personal property that has value that borrowers offer to lenders as a promise to pay the loan. Borrowers should make a list of their assets so they know what type of collateral they have available for a personal loan that is secured.

Types of Collateral

Collateral needed for a personal loan can include certificates of deposit, vehicles, real estate, savings accounts, stocks, land, jewelry and bonds. When a borrower chooses to use his home as collateral, the loan is referred to as a home equity loan or a second mortgage loan.


Collateral for a personal loan can be used by various lenders. For example, a pawn shop usually accepts jewelry; electronics, such as computers; and automobiles for short-term personal loans. When borrowing money from a bank, the borrower could use an automobile title if she owns the car, or a savings account.


When seeking to get a personal loan that requires collateral, the borrower should not ask for more money than is needed. The collateral presented to the bank or other lender must be equivalent to the amount of money requested. Borrowers should evaluate whether they are receiving a lower interest rate than they would with an unsecured loan.


A secured personal loan with collateral can be a motivational tool for the borrower to get her credit cleaned up so she will not have to get a secured loan in the future. A secured personal loan is easier to get since it's less risky for the lender.


A consequence of defaulting on a secured personal loan is that you lose the property you utilized as collateral. Make sure you can comply with the loan payment terms and amounts before signing on the dotted line.