Collateral loans are offered by nearly every type of bank and financial institution in the United States, including commercial banks, credit unions, online lenders, brokerage firms, and specialized finance companies. Which one to approach depends less on the bank’s name on the door and more on what you own. A house points you toward a commercial bank or credit union. A car or a CD points you toward a credit union or an online lender. A brokerage portfolio points you to the brokerage itself. A business with receivables and inventory points you to an asset-based lender.
Because the lender can recover its money through the pledged asset, secured loans carry lower rates than unsecured loans for the same borrower. As of early 2026, the best secured personal loan rates start around 3.50%, while average unsecured personal loan rates sit well above 12%.
Which Institutions Lend Against Which Assets
Each type of lender has a sweet spot. Knowing it before you apply saves weeks.
Commercial banks dominate real estate–secured lending. National and regional banks originate the bulk of mortgages, home equity loans, and HELOCs, and they also offer secured personal loans and business lines of credit backed by equipment, inventory, or property. If you already have a checking account and a house, your bank probably markets a HELOC to you directly.
Credit unions compete hard on secured lending, particularly auto loans and share-secured or CD-secured loans. Because they’re member-owned nonprofits, their rates on secured products often undercut commercial banks by a noticeable margin, and they tend to be more flexible with thinner credit files as long as the collateral is solid.
Online lenders occupy the secured personal loan space, often accepting vehicles, CDs, or investment accounts. Applications move faster and funding can arrive in days. The trade-off is a narrower list of acceptable collateral than a full-service bank.
Brokerage firms are the only source for margin loans, where you borrow against securities in an investment account. No bank or credit union offers this product because it requires holding the pledged securities directly. Major brokerages build margin borrowing into the platform, often as a simple toggle.
Specialized finance companies handle the most complex secured lending, particularly asset-based lending for businesses. They evaluate and monitor receivables, inventory, and machinery on an ongoing basis. Businesses that can’t qualify for a traditional bank line because profitability is uneven often turn to these lenders, who care more about the collateral than the income statement.
What Lenders Accept as Collateral
Real Estate
Primary residences, investment properties, and commercial buildings remain the most widely accepted collateral. The lender orders an independent appraisal, typically $200 to $600 for a single-family home, with complex or rural properties running higher. Federal banking regulators publish loan-to-value ceilings by property type: 65% for raw land, 75% for land development, 80% for commercial construction, and 85% for improved property and owner-occupied residential loans.1eCFR. Appendix A to Part 628 – Loan-to-Value Limits for High Volatility Commercial Real Estate Exposures A home appraised at $400,000 with an 80% cap supports a maximum loan of $320,000 minus any existing mortgage balance.
Cash and Marketable Securities
These are the collateral lenders like best because they’re easy to value and easy to liquidate. CDs, savings accounts, money market accounts, stocks, bonds, and mutual funds all qualify. CD-secured loans, sometimes called passbook or share-secured loans at credit unions, often let you borrow up to 100% of the deposit because the lender already holds the cash. The rate usually sits just a few points above what the CD earns, which makes these among the cheapest borrowing options available.
Vehicles
Cars, trucks, boats, and RVs secure both purchase financing and title loans against vehicles you already own. Because cars depreciate quickly, LTV ratios run tighter than for real estate. Lenders rarely advance more than wholesale value, and many cap advances at 80% to 90% of retail book value.
Business Assets
Accounts receivable, inventory, and equipment form the backbone of asset-based lending. Because these values fluctuate, lenders don’t advance dollar for dollar. Typical advance rates run up to 85% against eligible receivables and up to 60% against inventory, depending on quality and aging. The lender files a UCC financing statement with the state’s Secretary of State to put other creditors on notice that the assets are already pledged.2Cornell Law School. UCC Financing Statement
Digital Assets
Cryptocurrency as collateral is an emerging category. The FDIC clarified in 2025 that supervised banks may engage in crypto-related activities, including lending, without prior FDIC approval, provided they manage the risks.3FDIC. FDIC Clarifies Process for Banks to Engage in Crypto-Related Activities A handful of fintech and crypto-native platforms offer loans secured by Bitcoin or Ethereum, but traditional banks remain cautious. Because price volatility is extreme, LTV ratios are conservative, often 50% or less, and margin-call-style liquidation triggers are common.
How Much You Can Borrow
The loan-to-value ratio controls the answer. A lender divides the requested loan amount by the appraised value of the asset. A lower ratio gives the lender a bigger cushion if the asset loses value, which translates to better terms for you. The regulatory ceilings noted above set an upper bound for real estate; individual lenders often lend below those ceilings based on your credit profile.
For margin loans, Federal Reserve Regulation T limits initial borrowing to 50% of the purchase price of the securities.4eCFR. 12 CFR Part 220 – Credit by Brokers and Dealers (Regulation T) FINRA rules require you to keep at least 25% equity in the account at all times, though most brokerages set their maintenance threshold between 30% and 40%.5FINRA. 4210 Margin Requirements If your portfolio drops and equity falls below that line, the brokerage issues a margin call. The brokerage can sell your holdings to cover the shortfall without waiting for your response or notifying you first.6SEC.gov. Understanding Margin Accounts
What It Costs to Close
Secured loans come with upfront costs that unsecured loans don’t, because someone has to verify the collateral exists, is worth what you say it’s worth, and can legally be pledged.
- Appraisal fees. A residential appraisal runs $200 to $600, higher for multi-family, rural, or complex commercial properties. Commercial deals may also require a Phase 1 environmental site assessment, which starts around $2,000 to $4,000.
- Origination fees. Lenders typically charge 0.5% to 1% of the loan amount. On a $300,000 mortgage, that’s $1,500 to $3,000.
- Recording and filing fees. County recording fees for a mortgage or deed of trust vary by location. UCC filing fees for business assets vary by state, with online filings generally cheaper than paper.
- Title search and insurance. Real estate loans require a title search to confirm there are no competing liens or ownership disputes. Title insurance protects the lender, and optionally you, if a defect surfaces later.
For loans secured by liquid assets already held at the lending institution, closing costs are minimal or nonexistent. The bank already has the collateral and can value it automatically.
How to Apply
Preparation drives the timeline. Before approaching a lender, gather proof of ownership: a recorded deed for real estate, a clear vehicle title, or current account statements for securities and CDs. You’ll also need recent tax returns and a personal financial statement showing assets, liabilities, and income.7Fannie Mae. Tax Return and Transcript Documentation Requirements
Estimate the asset’s value yourself before the lender orders a formal appraisal. Pull recent comparable sales for real estate. Use current market prices for securities. Run an aging report on business receivables. Knowing the approximate value lets you calculate your expected LTV and structure a realistic request. Asking to borrow $500,000 against a property worth $400,000 wastes everyone’s time.
The collateral itself has to be legally ready to pledge. Title needs to be free of major defects, and any existing liens must be addressed. If a prior lien exists, the earlier lender may need to agree to a subordinate position, or you may need to pay that obligation off at closing. Discovering title problems late is one of the most common reasons secured loans stall.
Approval, Funding, and Timelines
The lender evaluates two things in parallel: whether you can repay, and whether the collateral adequately secures the loan. Credit score, debt-to-income ratio, and income stability answer the first. The appraisal or valuation answers the second.
Timelines vary sharply by collateral type. Loans secured by CDs or savings at the same institution can close in days. Auto-secured loans typically take one to two weeks. Real estate–backed loans are slowest, with appraisal, title search, and underwriting commonly stretching 30 to 60 days. The appraisal alone can take two to four weeks to schedule and complete.
At closing, you’ll sign a promissory note spelling out repayment terms and a security agreement formally pledging the collateral. The lender then perfects its lien publicly, which establishes priority over later creditors. Federal law requires clear written disclosures of all loan terms before closing, including the annual percentage rate, finance charges, and total payment amount.8Consumer Financial Protection Bureau. Regulation Z Section 1026.17 General Disclosure Requirements For home equity products, you generally have a three-day right to cancel after signing.
After funding, you’ll need to maintain adequate insurance on any physical collateral for the life of the loan. If coverage lapses, the lender will buy force-placed insurance at your expense, and it’s always more expensive than what you’d get on your own.
Watch the Fine Print on Cross-Collateralization
Some lenders, especially in multi-loan relationships, include a cross-collateralization clause in the security agreement. That means a single asset secures more than one loan at the same time. A common example: a bank finances both your business equipment and your commercial real estate, and the documents pledge each asset as collateral for both loans.
The risk is easy to miss. Defaulting on one loan can trigger default on every other loan tied to that collateral. Cross-collateralization also restricts your ability to sell or refinance the pledged asset, because any sale may require paying off all associated debts rather than just the one directly tied to the property. Before signing, look specifically for cross-collateralization language and negotiate it out if you can.
What Happens If You Default
Default sets a sequence in motion that can cost you more than the asset itself. The lender’s first step is usually to contact you about curing the default. For federally backed loans, the lender must make reasonable efforts to reach you and discuss options before accelerating the loan or starting repossession.9eCFR. 24 CFR 201.50 – Lender Efforts to Cure the Default Many states impose their own notice-and-cure requirements, with timelines that vary. Once those windows close, the lender can seize and sell the collateral.
If the collateral sells for less than what you owe, you’re not necessarily off the hook. Under the Uniform Commercial Code, after a lender disposes of repossessed personal property and applies the proceeds, the borrower remains liable for any remaining balance.10Cornell Law School. UCC 9-615 Application of Proceeds of Disposition; Liability for Deficiency and Right to Surplus The lender can pursue a deficiency judgment and use wage garnishment or bank levies to recover the shortfall. Rules around deficiency judgments after real estate foreclosure vary by state; some states prohibit them entirely for certain mortgage loans, others allow them freely.
There’s also a tax consequence people rarely see coming. When a lender forgives any remaining balance after seizing and selling the collateral, the IRS treats the forgiven amount as taxable income. If you were personally liable (a recourse loan), the canceled amount above the property’s fair market value counts as ordinary income. For nonrecourse debt, the entire balance is treated as proceeds from selling the property, which can trigger a capital gain.11Internal Revenue Service. Publication 4681 – Canceled Debts, Foreclosures, Repossessions, and Abandonments The lender reports any cancellation of $600 or more on Form 1099-C.
There are exclusions that can reduce the tax hit, including insolvency and bankruptcy discharge. Note that the qualified principal residence indebtedness exclusion, which previously sheltered forgiven mortgage debt on a primary home from taxation, expired at the end of 2025 and has not been renewed as of this writing.12Office of the Law Revision Counsel. 26 USC 108 – Income From Discharge of Indebtedness Congress has extended it multiple times in the past, sometimes retroactively, but that shouldn’t be counted on.