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

11.99 % p.a.

variable rate

from

12.48 % 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: 11.99% p.a.
  • Comparison rate: 12.48% p.a.
  • Interest rate type: Variable
  • Application fee: $0
  • Minimum loan amount: $5,000
  • Maximum loan amount: $75,000
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Comparison of unsecured car loans

Rates last updated July 22nd, 2017
$
Name Product Interest Rate (p.a.) Comparison Rate (p.a.) Min Loan Amount Loan Term Application Fee Monthly Repayment Product Description
Citi Personal Loan Plus
From 11.99% (variable)
12.48%
$5,000
3 to 5 years
$0 ($199 fee waived)
Borrow up to $75,000. All approved applicants will receive the advertised variable rate of 11.99% p.a.
RateSetter 2-Year Personal Loan
From 4.69% (fixed)
7.11%
$2,001
2 to 2 years
$0 (Upfront fee $250 for loan terms of 2 years and above)
This peer-to-peer loan is only available for a 2-year term at the rate of 4.69% p.a.
RateSetter Personal Loan
From 8.46% (fixed)
8.97%
$2,001
0.5 to 5 years
$0 (Upfront fee $250 for loan terms of 2 years and above)
Ratesetter allow you to get a personalised rate based on your credit score.
NOW FINANCE Personal Loans
From 8.95% (fixed)
10.42%
$4,000
1.5 to 7 years
$395 (Based on $10,000)
Get rewarded with a low interest rate for your good credit history.
SocietyOne Unsecured Personal Loan
From 7.9% (fixed)
9.92%
$5,000
2 to 5 years
3% (of loan amount)
Interest rates for a 3 year loan range from 7.9% p.a. to 10.90% p.a. Comparison rate from 9.92% p.a. to 13.63% p.a. for good credit scores A and AA
CUA Discount Fixed Personal Loan (Loans over $30,000)
From 10.99% (fixed)
10.99%
$30,000
1 to 7 years
$0
Take advantage of a competitive fixed rate and no monthly fees when you borrow over $30,000
Pepper Money Unsecured Fixed Rate Personal Loan
From 9.99% (fixed)
9.99%
$5,000
1 to 7 years
$0
Apply for up to $50,000 and receive conditional approval within minutes.
Latitude Personal Loans (Unsecured)
From 13.99% (fixed)
15.2%
$3,000
2 to 7 years
$250 (Loans under $4000 - $140)
An unsecured loan designed for multiple purposes – renovating, buying a car or travelling. Funds can be in your count in as little as 24 hours.
bcu Unsecured Multipurpose Loan
From 8.94% (variable)
9.85%
$4,000
1 to 5 years
$200
A flexible unsecured or secured personal loan with a competitive rate.
QT Mutual Bank Personal Loan
From 12.95% (variable)
13.54%
$3,000
5 years
$395 (establishment fee)
You can use this personal loan to buy just about anything: a new boat, home renovations, a holiday or even to consolidate existing debt. Only available to Queenslanders

Compare up to 4 providers

How does an unsecured car loan work?

There are two types of car loans – secured and unsecured. When you opt for an unsecured 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.

The 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 car loan that's unsecured

  • 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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