Overview
Auto secured personal loans allow borrowers to use their vehicle as collateral to obtain financing. An Auto Secured Personal Loan involves placing a lien on your vehicle in order to access the value of that collateral.
This guide explains how Auto Secured Personal Loans work, when they might be a good fit, and what to expect during the application and repayment process.
What Is an Auto Secured Personal Loan?
An auto secured personal loan is a personal installment loan that uses your existing vehicle as collateral.
- You retain use of your vehicle, but a lien is placed on the title to secure the vehicle as collateral for the loan.
- This type of loan may offer better rates than unsecured personal loans because it’s backed by collateral.
Example: You own your car outright and take out a $5,000 loan using the car title as collateral. The lender adds a lien to the title until the loan is repaid.
Key Considerations:
- If Upstart determines that an auto secured loan is an available option for your personal loan, an auto secured offer will be presented
- The vehicle must be in your name, fully owned (no outstanding loan), and meet eligibility criteria.
- If you default on the loan, the lender may exercise its right under the contract to repossess the vehicle.
Application Process
Step 1: Check Your Rate
You can check your personal loan rate online without affecting your credit score.
📌If an auto secured personal loan is an option based on the information you entered, an Auto Secured Personal loan rate offer may be presented.
Step 2: Submit Your Application
If you determine the Auto Secured Personal Loan is the best option, you may be asked to provide additional details such as:
- Vehicle information (VIN, mileage, etc.)
- Proof of income and insurance
- Identification and ownership documents
Step 3: Loan Review & Approval
If approved, you'll receive loan terms including the rate, amount, and repayment period. The lender will add a lien to your vehicle title.
Step 4: Loan Funding
You will be asked to add a bank account where the funds will be directly deposited.
Repayment and Title Release
- You’ll make fixed monthly payments for the duration of the loan.
- Once the loan is paid in full, the lien is removed and the vehicle title is released back to you.
- All loans on the Upstart platform allow early repayment with no prepayment fees or penalties.
- In the event of loan or payment default, the vehicle secured as collateral may be repossessed by your lender
Is an Auto Secured Personal Loan Right for You?
An auto secured loan might be a good fit if:
- You want to borrow at a lower rate than an unsecured loan.
- You fully own your vehicle and want to access its value.
But it may not be the right option if:
- You don’t want to risk losing your vehicle.
- Your car doesn’t meet eligibility requirements.
- You prefer unsecured financing or need more flexibility.