If you’ve ever shopped for a personal loan, you’ve probably run into two kinds: secured and unsecured. Most people don’t know what that actually means or why anybody should care. Here’s the plain-English version.
Unsecured loans
An unsecured loan is backed by your promise to pay and your credit history — that’s it. There’s nothing specific the lender can claim if the loan stops getting paid.
That sounds simple, and it is. But because the lender is leaning entirely on your credit, unsecured loans usually come with:
- Stricter credit requirements — the lender is leaning on your score because they have nothing else to lean on
- Smaller loan amounts for borrowers without strong credit
- A door that tends to close fast if your credit isn’t where it needs to be
If you’ve got excellent credit, unsecured can work fine. For everybody else, finding a yes gets harder the further down the credit ladder you go.
Secured loans
A secured loan is backed by collateral — usually a vehicle, but it can be a trailer, a piece of property, or something else of value.
Here’s what changes when there’s collateral on the loan:
- Easier approval — your credit score doesn’t have to do all the work
- Bigger loan amounts are possible because the loan is backed by something real
- A real chance to build credit — paying off a secured loan successfully is one of the strongest credit-building moves there is
The collateral is the lender’s safety net. As long as you make your payments, you keep your collateral and your loan moves along normally — and that’s how most secured loans close. People borrow, they pay, they walk away with the collateral and a stronger credit profile than they started with.
Which kind does Citizens do?
We do secured personal loans. We’ve done it that way since 1993, and we’re going to keep doing it that way.
Here’s why we think it’s the better way to do it — for you and for us.
For you, it usually means a higher chance of approval, a real shot at building credit through a successful loan, and a relationship with a lender who can actually look at your full situation instead of just a credit score on a screen. For somebody whose credit isn’t perfect, that’s the difference between getting a fair offer and getting a polite “no thanks” everywhere else.
For us, the structure means we can say yes more often. Because there’s something backing every loan, we can keep our doors open to people that an unsecured-only lender would never even talk to.
What kind of collateral works?
Plenty of options, depending on the loan size:
- Vehicles — car, truck, motorcycle
- Trailers
- Real estate for larger loans
When you call or come in, we’ll talk through what you’ve got and what makes sense. We’ve been at this long enough that we can usually figure something out.
Got questions?
The best way to find out what works for your situation is to call. Five minutes on the phone with Ms. Carrie or Ms. Julie will tell you more than an hour of reading articles online.