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What is a Secured Loan?

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A secured loan is a loan where the borrower has put up collateral as a guarantee of repayment.  In other words, In return for borrowing money, the borrower must promise to give the lender something of value if they fail to pay them back, generally of at least equal in value to the loaned amount of money.

How is a Secured Loan different from a credit card?

Like credit cards, secured loans require a regular payment, normally monthly, from the borrower. There are a few major differences however:

  • Interest Rate
  • Available Credit


Interest Rate: Credit card interest rates can change for a number of reasons: missed payment, change in credit score, or possessing a variable interest rate. In contrast, the interest rate of a secured loan is often fixed for the life of the loan

Available Credit:  When you borrow in the form of a secured loan, you receive a fixed amount of money. Unlike a credit card, which is a line of credit, if you want more money you have to fill out an additional loan application.

What are the different types of Secured Loans?

There are two common secured loans:

  • Mortgage
  • Auto Loan

Mortgages: These loans are normally secured against the home you are purchasing. They have a lengthy repayment schedule, 15 to 30 years normally, and have a longer application process.

 Vehicle Loans: Normally, these loans are used to purchase a car. The lender pays the full price of the vehicle, then the borrower pays them back in installments over the life of the loan.

Other Secured Loans: You can also get a secured loan using something like a savings account or investment portfolio. You won’t have access to the accounts for the life of the loan. And in the case of an investment portfolio, if the value drops too much the lender might demand an earlier repayment schedule.

How much money can I get for a Secured Loan?

That depends on the loan type. The value of a mortgage loan for example, is for enough money to purchase a house. Similarly, a vehicle loan will be for the value of the car you are purchasing. This is in contrast to something like an unsecured, short-term loan, which may be for only a few hundred dollars. If you are using something to secure the loan, you can generally borrow more money, at a better rate, for a longer period of time. Unfortunately the item you are buying with the loan money is often used for collateral for the loan, a house for example. There are one or two exceptions to this, like an auto title loan.

What happens if I can’t pay back my Secured Loan?

If you miss a payment by 30 days, your lender may report it to the three major credit bureaus, Equifax, Experian, and TransUnion. This may damage your credit score, which can impact your ability to secure financing in the future, for a car, a house, student loans, etc. It may be reported again if you continue to miss payments, after it’s another 30 days past due, then 60 days, etc. This is how a single loan can wreak havoc on your credit history. The lender may even take the borrower to court to try and recover their money. In the ensuring expensive legal battle, the borrower can be out a lot of money if they lose, have to pay their own court costs, as well as the court costs of the lender. If they are unable to pay, they may be forced into bankruptcy.

Once you default, the lender can begin the process of repossessing your collateral. Once they have it, they can sell it to recoup some of the money they lost on the loan. Depending on the state, you may or may not be entitled to any proceeds that go beyond the amount you owe the lender.

What’s an Auto Title Loan?

An auto title loan is a type of secured loan where you use your car title as collateral. Like other secured loans, you pay the interest and a portion of the principle each month over the life of the loan. Like mortgages or vehicle loans, your loan is secured with collateral, meaning you may be able to get a better interest rate than with an unsecured loan. Because title loan lenders are more concerned with your ability to pay and the value of your car, there’s no lengthy loan application process and they aren’t concerned with your credit score. There are only a few things you need to get an auto title loan1:

  • Clear-and-Free title for the vehicle in your name
  • Proof of Income
  • Government-Issued I.D. (Driver’s License, State I.D., Passport, etc.)
  • Proof of Residence (Certain pieces of mail)
  • Photos of the front, back, and sides of vehicle

How to get a Title Loan with LoanMart

As you can see, if you need funds for an emergency expense and can’t wait for a lengthy application process, an auto title loan might be right for you. If you own a clear-and-free vehicle in your name you potentially qualify for an auto title loan of up to $30,0001.

With our easy process, we give you three ways to contact us that makes it convenient for you:

  1. Visit a participating location
  2. Call us at 1-855-422-7412
  3. Sign up online without leaving your home

Once you’ve decided how you want to get in touch, just follow these steps to get the money you need1:

  1. Fill out the registration form.
  2. Submit your important documents to your LoanMart representative.
  3. Sign your LoanMart agreement.
  4. Collect your funds1!
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