Secured loans vs unsecured

Secured vs unsecured personal loans

Rates and Fees verified correct on December 9th, 2016

Not sure whether a secured or unsecured personal loan is right for you? We show you the differences to help you make the right choice.

A personal loan can help you take your next step if you don’t have ready finance. Whether you want to buy a car or undertake home renovations, you’re likely to find a number of different lenders and loans to choose from.

If you’re looking to purchase an asset, or you already have one, you may be considering whether a secured or unsecured personal loan is a better option for you. We break down the differences in the guide below.

What is the difference between secured and unsecured personal loans?

The main difference between these two loans is that with a secured personal loan you have to provide an asset as a guarantee, while you don’t with an unsecured personal loan. If you default on a secured personal loan, the lender can repossess the asset and sell it to recoup its losses. The asset is usually one you are purchasing with the funds you are borrowing from the lender, but it can also be an asset you already own.

IMB Secured Personal Loan

IMB Secured Personal Loan

Apply for a IMB Secured Personal Loan and access a low interest rate offer with no ongoing monthly fee.

  • Interest Rate From: 7.39% p.a.
  • Comparison Rate: 7.67% p.a.
  • Interest Rate Type: Fixed
  • Application Fee: $199
  • Minimum Loan Term: 1 year
  • Maximum Loan Term: 5 year
  • Minimum Loan Amount: $2,000
  • Maximum Loan Amount: $60,000

Secured and unsecured personal loans you can apply for

Find both secured and unsecured loan options by clicking through each of the tabs and compare what's available.

Rates last updated December 9th, 2016
$
Interest Rate (p.a.) Comparison Rate (p.a.) Min Loan Amount Loan Term Application Fee Monthly Repayment
IMB Secured Personal Loan
A secured loan from IMB with flexible repayment features
From 7.39% (fixed) 7.67% $2,000 1 to 5 years $199 Go to site More
Latitude Personal Loan (Secured)
Can be used for whatever purpose: renovating, buying a car, booking a holiday. Funds can be in your account in as little as 24 hours.
From 12.99% (fixed) 14.2% $3,000 2 to 7 years $250 (Loans under $4000 - $140) Go to site More
RACQ Secured Personal Loan
A fixed rate loan offering from RACQ with the ability to make extra repayments.
From 9.45% (fixed) 10% $5,000 1 to 7 years $378 Go to site More
Bank of Melbourne Secured Personal Loan
A low rate personal loan from Bank of Melbourne with variable or fixed option.
From 8.49% (fixed) 9.39% $3,000 1 to 5 years $195 Go to site More
Rates last updated December 9th, 2016
$
Interest Rate (p.a.) Comparison Rate (p.a.) Min Loan Amount Loan Term Application Fee Monthly Repayment
HSBC Personal Loan
A competitive fixed interest rate loan with the option to make extra repayments. Min. income $30,000
From 11.99% (fixed) 12.54% $5,000 1 to 5 years $150 Go to site More
NAB Personal Loan Unsecured Variable Rate
A low interest rate loan with redraw facility to access money you've paid in advance.
From 13.69% (variable) 14.56% $5,000 1 to 7 years $150 Go to site More
CUA Discount Fixed Personal Loan (Loans over $30,000)
Take advantage of a competitive fixed rate and no monthly fees when you borrow over $30,000
From 10.99% (fixed) 10.99% $30,000 1 to 7 years $0 Go to site More
Latitude Personal Loans (Unsecured)
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.
From 13.99% (fixed) 15.2% $3,000 2 to 7 years $250 (Loans under $4000 - $140) Go to site More
ANZ Fixed Rate Personal Loan
A flexible loan option that lets you pay off your debt, buy a car, fix up your house or cover travel costs.
From 13.95% (fixed) 14.81% $5,000 1 to 7 years $150 Go to site More
NOW FINANCE Personal Loans
Get rewarded with a low interest rate for your good credit history.
From 9.95% (fixed) 11.41% $4,000 1.5 to 7 years $395 (Based on $10,000) Go to site More
MoneyPlace P2P Loan
Interest rates from 8.90% p.a to 17.25% p.a. Comp rates from 8.90% p.a to 19.01% p.a depending on your credit score.
From 8.9% (fixed) 8.9% $5,000 3 to 5 years 0% - 3.75% of loan amount Go to site More
RACQ Unsecured Loan
An unsecured personal loan that lets you borrow funds for what you need. Repay the loan on terms up to seven years.
From 13.95% (fixed) 14.52% $5,000 1 to 7 years $378 Go to site More
RACV Personal Loan
You could use this personal loan offer from RACV to help finance a renovation, holiday or project.
From 9.15% (fixed) 9.69% $5,000 1 to 7 years $370 Go to site More
NAB Personal Loan Unsecured Fixed
An unsecured loan available for a wide range of purposes for a long period of time up to 7 years.
From 14.19% (fixed) 15.06% $5,000 1 to 7 years $150 Go to site More
RateSetter Personal Loan
Ratesetter allow you to get a personalised rate based on your credit score.
From 9.42% (fixed) 9.42% $2,001 0.5 to 5 years $0 (fees may be charged) Go to site More
Bank of Melbourne Unsecured Personal Loan
An unsecured personal loan that gives you a choice between a fixed or variable rate.
From 12.99% (variable) 13.87% $3,000 1 to 7 years $195 ($0 for existing customers) Go to site More
ANZ Variable Rate Personal Loan
A variable rate loan that lets you make and redraw additional repayments.
From 14.69% (variable) 15.55% $5,000 1 to 7 years $150 Go to site More
BankSA Unsecured Personal Loan
BankSA allows you to borrow up to $40,000 with your choice of a fixed or variable rate.
From 12.99% (variable) 13.87% $3,000 1 to 7 years $195 ($0 for existing customers) Go to site More

What kind of assets can be used as security?

Lenders are willing to use all kind of assets that hold value as guarantees for loans. Whether you are looking to purchase one of the following items or already own one, you might be able to use it as security for a loan:

  • Vehicles. This includes new and used cars, motorbikes, boats, caravans and even jet skis.
  • Property. If you own a property outright or hold equity in a mortgaged property, you can use it as security for a loan.
  • Term deposits. If you hold a term deposit account with a lender, they may be willing to use the amount as a guarantee for a loan.
  • High-cost assets. Some lenders will accept high-cost jewellery, fine art and other items as security for loans.

What type of loan is better for you?

If you’re unsure what type of personal loan you should be applying for, here are some considerations to keep in mind:

  • If you’re buying a vehicle. The age, cost and type of vehicle will have a bearing on whether you can or should get a secured personal loan or whether an unsecured loan will be a better option for you. Some lenders will only accept new vehicles (generally less than two years old) as a guarantee. If you want an older car, it may need to pass a vehicle inspection check and still need to be under a certain age, usually seven years.
  • If you want to use the loan amount for various purposes. Lenders offering secured loans tend to place restrictions on the use of the loan amount. For instance, if you are taking out a secured car loan but also want to buy some furniture, the lender may not let you borrow more than the cost of the car.
  • If you aren’t looking to purchase an asset. You will need to already own the asset you want to use as security. While this is a less common form of secured personal loan, it is an option offered by some lenders.

How you can compare secured and unsecured personal loans

While both types of loans are a viable way for you to finance a new purchase, you can find the option that better suits your needs by comparing them to one another. Here are some main points of comparison:

  • Interest rates. As secured personal loans are less risky for lenders, they tend to come with lower interest rates. You can find fixed and variable rates for both secured and unsecured loans.
  • Fees. You won’t find a great difference in fees between the two loan types. Expect establishment fees for both types of loans, although you can find lenders that don’t charge any fees to set up the loan. Some loans come with monthly fees, but these are not standard, so make sure to compare so you know your loan is competitive.
  • Flexibility of repayments. The difference lies in whether the loan is fixed or variable. If you apply for a fixed rate loan, you are more likely to find penalties for extra repayments and repaying your loan early. Variable rate loans are less likely to have these penalties. Compare lenders to find the most competitive option.
  • Loan terms. For both secured and unsecured loans, you will generally find terms of between one and five years for fixed rate loans and one and seven years for variable rate loans.
  • How you can use the funds. If you apply for an unsecured loan, you can generally use the funds for whatever purpose you want. Secured loans tend to come with more restrictions. For instance, if you’re taking out the loan to pay for a car, the lender may require you to use the entire loan amount to pay for the cost of the vehicle.

What to consider before you apply

  • Will you be able to afford the repayments? If you’re opting for a secured personal loan, the lender will be able to repossess your asset if you can’t afford the repayments. If you are considering an unsecured personal loan, keep in mind the interest rate is likely to be higher and so your ongoing repayments will be more costly.
  • How much flexibility do you want with your loan amount? If you want to use your loan to make a large purchase as well as a number of other items, check whether this is allowed by your secured loan lender. If you can’t find a secured loan that allows for this, you may need to apply for an unsecured personal loan.
  • Do you want a fixed or variable rate loan? Depending on the type of loan you want to take out, you may find more fixed or more variable rate loan options. For instance, if you’re considering a secured car loan, you may find more fixed rate loans than variable rate loans. It’s important to compare all available options before you apply.

The points will also come back to comparison – which option is best for you? The only way to work it out is to consider your situation, your needs and the loan type that is going to work for what you want.

Frequently asked questions

What’s the difference between a secured car loan and an unsecured car loan?

A secured car loan will use the car you purchase as security for the loan in case you default. With an unsecured car loan, you still use the funds you borrow to purchase the car, but the vehicle isn’t attached to the loan as security.

Is VET-FEE HELP loan secured or unsecured?

Your student loan, obtained through the VET-FEE HELP loan program, is unsecured.

Is there a difference between a secured loan and a secured car loan?

Yes. A car loan is a type of secured loan specifically used to purchase a vehicle. A secured loan is a general type of loan where a number of different assets, including vehicles, can be used as security for the loan.

What’s the difference between a secured home equity loan and a mortgage?

A home equity loan uses the equity you hold in your property as security and usually comes in the form of a revolving line of credit. People often use home equity loans for home renovations. On the other hand, a mortgage is taken out for the purpose of buying property, with the entire property being used as security for the loan.

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Related Posts

HSBC Personal Loan

A competitive fixed interest rate loan with the option to make extra repayments. Min. income $30,000

Latitude Personal Loan (Secured)

Can be used for whatever purpose: renovating, buying a car, booking a holiday. Funds can be in your account in as little as 24 hours.

CUA Discount Variable Personal Loan (Loans over $30,000)

Apply for a loan over $30,000 and enjoy a discounted interest rate

SocietyOne Unsecured Personal Loan

Interest rates for a 3 year loan range from 7.88% p.a. to 25.49% p.a. Comparison rate from 9.9% p.a. to 26.74% p.a. depending on your credit score

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