A loan can be secured without a down payment in specific circumstances, though this depends on the loan type, lender policies, and collateral value. Some institutions may accept collateral alone if its market value sufficiently covers the loan amount, reducing their risk. For example, certain personal loans or peer-to-peer products allow borrowers to pledge assets like vehicles or property without an upfront payment. However, such loans often carry higher interest rates due to increased lender risk.

The primary reason a secured loan might not require a down payment is the sufficiency of collateral. Lenders assess the asset’s appraised value to determine loan terms. According to a 2023 Federal Reserve report, approximately 12% of secured loans in the U.S. did not mandate a down payment, primarily in niche markets like equipment financing or small business lending. For instance, some banks offer inventory loans where businesses use existing stock as collateral, bypassing down payment requirements. However, conventional mortgages typically require a 5-20% down payment, as noted by the National Association of Realtors. Lenders may also adjust terms based on creditworthiness; borrowers with excellent credit scores (e.g., above 780) might qualify for lower down payments or none. Data from the Consumer Financial Protection Bureau (CFPB) reveals that 8% of auto loans in 2022 were secured without a down payment, often through trade-in equity. Ultimately, while possible, such arrangements are less common and come with trade-offs like higher costs or stricter collateral criteria.