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Secured Loans and Lines of Credit

The Benefits of a Secured Loan Video

By using your personal assets such as your home or savings as collateral for a secured loan, you could access lower interest rates and better borrowing options.

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Finding the loan that’s right for your situation is important, so that you get the rates, terms, and payment options that fit your needs. Secured loans might be a good choice if you have personal assets such as equity in your home or funds in a savings account that can be used as collateral. Plus, secured loans may have lower interest rates, larger loan amounts, or better terms than unsecured loans. Keep in mind, with a secured loan, the lender can take possession of the collateral if you don't repay the loan as agreed.

Types of secured loans and lines of credit

Here are a few personal assets that can help you secure a loan.

Your savings

If you use a CD or savings account as collateral for a loan or line of credit, you can typically qualify within hours and have the funds within the same or next business day. You could also receive the added benefit of a lower Annual Percentage Rate , compared to an unsecured option.

You can also use your savings as collateral for a secured credit card. Secured cards work like any other credit card, but the credit line is determined by how much money you place into a security deposit account as collateral.

With a secured credit card, you can build or rebuild your credit history by using the card responsibly and making your payments on time. While credit line minimums and security deposits vary by lender, Wells Fargo offers a secured card starting at $300.

Your home

The amount you may be able to borrow is based on many factors, including the available equity in your home. The amount of home equity you have available is the difference between what your home is worth and the amount you owe on your home and other outstanding obligations that are secured by your home.

To calculate your available equity:

  • Calculate an estimate of your home's current market value. This would be what you would sell your house for if you were to sell it today. You can find many resources on the internet to help you with your estimate.Graphic illustrating if the total of the amount you want to borrow and the amount you already owe on your home isn’t more than 80% of your home’s value, you may be able to access some of your home’s equity.
  • Multiply your home's market value by 80%. It's recommended (and required by some lenders), that you keep at least 20% equity available in your home.
  • Determine the amount of the outstanding debt secured by your home. This would include the amount you owe on your mortgage and any existing home equity financing debt.
  • Subtract the outstanding debt from 80% of your home's value. This will give you an idea of the equity in your home that may be available for you to borrow.

At Wells Fargo, you can access the equity in your home with:

 Need funds quickly? 

Using a Wells Fargo CD or savings account as security for a loan or line of credit may enable you to qualify within hours and get the funds on the same or next business day.

Annual percentage rate

The annual percentage rate, or APR, is the rate, for a payment period, multiplied by the number of payment periods in a year. In other words, it describes the annual interest rate on a loan for a whole year, rather than the monthly rate.