Unsecured car loan guide

Want a more flexible financing solution for your vehicle purchase? Consider an unsecured car loan.

If you want to purchase a secondhand car, you want to use the loan amount to pay for something in additional to your vehicle, or you just don't want to risk attaching your vehicle as a guarantee, an unsecured car loan may be an option for you. This loan lets you purchase your vehicle, plus anything else you like, without attaching your car to the loan as security. Find out more about this loan, and if it's right for you, by reading our guide below.

Citi Personal Loan Plus

Citi Personal Loan Plus

from

9.99 % p.a.

variable rate

from

10.95 % p.a.

comparison rate

  • Loan amounts from $5,000
  • Offers a reusable credit facility
  • Repay over 5 years
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Citi Personal Loan Plus

Apply for a Citi Personal Loan Plus and get competitive interest rate offer with a reusable credit facility.

  • Interest rate from: 9.99% p.a.
  • Comparison rate: 10.95% p.a.
  • Interest rate type: Variable
  • Application fee: $199
  • Minimum loan amount: $5,000
  • Maximum loan amount: $75,000
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Unsecured car loans comparison

Rates last updated February 25th, 2018
$
Name Product Interest Rate (p.a.) Comparison Rate (p.a.) Min Loan Amount Loan Term Monthly Service Fee Application Fee Product Description Monthly Repayment
Citi Personal Loan Plus
9.99% (variable)
10.95%
$5,000
3 to 5 years
$10
$199
Borrow up to $75,000 to use for a range of purposes. Competitive rate of 9.99% p.a. available to all approved applicants.
Harmoney Unsecured Personal Loan
From 6.99% (fixed)
7.69%
$5,000
3 to 5 years
$0
$500 (Upfront fee)
Interest rates are tailored to each applicant individually, and start from as low as 6.99% p.a. to 26.95% p.a. based on your credit history.
SocietyOne Unsecured Personal Loan
From 7.5% (fixed)
9.51%
$5,000
2 to 5 years
$0
3% (of loan amount)
Based on your risk profile, you will receive a tailored rate between 7.5% and 20.14% with a SocietyOne personal loan. Apply before 31 March 2018 to earn 2 Velocity Points for every $1 you borrow.
HSBC Personal Loan
From 9.5% (fixed)
10.06%
$5,000
1 to 5 years
$5
$150
A competitive fixed interest rate loan with the option to make extra repayments. Rates range from 9.50% p.a. to 15.99% p.a. based on your credit history.
Pepper Money Unsecured Fixed Rate Personal Loan
From 9.99% (fixed)
9.99%
$5,000
1 to 7 years
$0
$0
Apply for up to $50,000 and receive conditional approval within minutes. Interest rates range from 9.99% p.a. to 21.49% p.a. The rate you are approved for depends on individual circumstances.
NAB Personal Loan Unsecured Fixed
11.99% (fixed)
12.87%
$5,000
1 to 7 years
$10
$150
An unsecured personal loan with a competitive fixed rate that you can make additional repayments to without penalty. Note: You must have held a NAB credit card or transaction account for at least 6 months before applying.
Heritage Bank Standard Personal Loan
From 10.94% (fixed)
11.57%
$5,000
1 to 5 years
$5
$200
A competitive personal loan available up to $50,000.
Westpac Unsecured Personal Loan
From 12.99% (fixed)
14.14%
$4,000
1 to 7 years
$12
$250
Borrow up to $50,000 for a term of up to 7 years with this unsecured loan. Apply before 28 February 2018 for a 1% p.a. interest rate discount. Conditions apply.
MyState Unsecured Personal Loan
From 12.99% (variable)
16.42%
$3,000
1 to 7 years
$10
$200
Apply for up to $50,000 and make additional repayments at any time without penalty.
Latitude Personal Loan (Unsecured)
From 13.99% (fixed)
15.19%
$3,000
2 to 7 years
$13
$250 (Loans under $4000 - $140)
An unsecured loan designed for multiple purposes – renovating, buying a car or travelling. Funds can be in your account in as little as 24 hours. If you have an Unsecured Personal Loan with any Big Four bank, Latitude will beat your rate by 1% p.a. Offer ends 18 March 2018
St.George Unsecured Personal Loan - Fixed Rate
From 12.99% (fixed)
14.06%
$2,000
1 to 5 years
$12
$0 (On new loan applications before 28th February 2018.)
Convenient redraw facility and flexible personal loan repayment options with a competitive interest rate. Apply before 28 Feb 2018 for a $0 application fee. Conditions apply.
NAB Personal Loan Unsecured Variable Rate
15.69% (variable)
16.55%
$5,000
1 to 7 years
$10
$150
An unsecured loan up to $55,000 that you can repay early without penalty. Note: You must have held a NAB credit card or transaction account for at least 6 months before applying.

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How do unsecured car loans work?

There are two types of car loans – secured and unsecured. When you opt for an unsecured car loan, you will have no restrictions in terms of the type of car you purchase or how you spend your loan amount. You will be able to borrow more to take out insurance or cover additional vehicle costs or any other purposes you choose, so long as the loan amount is affordable.

An unsecured car loan is a higher risk for the lender because there is no guarantee attached, and so you should expect a higher interest rate than you would with a secured car loan. You may also be subjected to stricter eligibility criteria in terms of your own financial stability, but the car you are purchasing will not need to meet any criteria.

What are the types of unsecured car loans?

You can generally apply for either a car loan with a fixed or variable interest rate. Each one of these come with their own pros and cons. You will need to consider your personal and financial situation to see which type of unsecured car loan suits you best.

  • Fixed interest rate. This means that the interest rate that you have to pay each month for the whole duration of the loan does not change. This is important because it allows you to know exactly how much you have to pay each month. If your loan term is a period of five years, you can adjust your budget accordingly.
  • Variable interest rate. This means that the lender can change the interest rate anytime, in response to the monetary policy from the Reserve Bank of Australia (RBA). You could either end up paying more for your car, or less depending on the economical factors at the time.

How to compare unsecured car loans

There are many lenders ready for your business and offering promotional incentives, which is why finding the best product can be a very overwhelming process. But there are several simple things that you can do to make this choice easier.

  • Interest rate. The interest rate is the most important thing to take into account. Generally, the lower the rate, the lower your repayments will be. The first thing you should do is to compare the interest rate that different lenders offer by checking the "interest rate" column in our comparison table above.
  • Comparison rate. The comparison rate reflects the true cost of the loan because it takes into account the fees that are payable.
  • Fees. There are several fees that lenders may charge aside from the interest rate. For example, if you want to repay your unsecured car loan earlier than specified, but you may be charged for doing so, you may also be charged a fee for additional repayments. Application and monthly services fees are also common with car loans.
  • Additional repayments. Some lenders allow you to make additional repayments at no extra cost, some will charge a fee.
  • Redraw facility. Redraw facilities allow you to withdraw any extra repayments you’ve put into your car loan. This is particularly useful in emergencies when you may need the cash, but check if a fee or limit applies.

The benefits and drawbacks of a unsecured car loan

  • You don’t need to provide collateral against the loan amount, which means the loan process could be faster.
  • The loan amount is more flexible because you can use it however you like, for debt consolidation or to use it to make a large purchase as well as to finance your car.
  • As this is an unsecured car loan, the lender can choose to take your case to the court if you default on your repayments.
  • The interest rates are higher than secured car loans because there is more risk for the lender.
  • As the loan is a higher risk you may only be eligible for a lower loan amount.

Things to avoid about unsecured car loans

With unsecured car loans, if you fail to make repayments the lender has no asset to sell, so it can take you to court. As the loan amount is more flexible and you can borrow more than the price of your car it's your responsibility not to apply for more than you need. Work out a budget to ensure you will be able to afford your repayments. These loans come with higher rates than secured personal loans, so take this into account before you submit your application.

Remember to always compare a range of options before applying. Our comparison tables can help you in this process

Frequently asked questions about unsecured car loans

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Beyond Bank Low Rate Car Loan "Special Offer"

A great rate for cars under 2 years old.

RACV New Car Loans

A competitive rate car loan from RACV with no monthly fees and 5-hour loan approval.

Heritage Bank Car Loan

Apply for up to $100,000 to finance a new or used car at a competitive fixed rate.

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