Secured loans vs unsecured

Secured vs unsecured personal loans

Rates and fees last updated on

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.

Bank Australia Car Loan

Bank Australia Car Loan

from

6.45 % p.a.

fixed rate

from

6.66 % p.a.

comparison rate

  • Finance a new or used car
  • Extra repayments allowed
  • Green and safe car discounts
Security Logo

100% confidential application

Bank Australia Car Loan

Apply for Bank Australia Car Loan and enjoy a great low fixed interest rate with feature of extra repayments option.

  • Interest rate from: 6.45% p.a.
  • Comparison rate: 6.66% p.a.
  • Interest rate type: Fixed
  • Application fee: $150
Go to site

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 June 22nd, 2017
$
Name Product Interest Rate (p.a.) Comparison Rate (p.a.) Min Loan Amount Loan Term Application Fee Monthly Repayment Product Description
Bank Australia Car Loan
From 6.45% (fixed)
6.66%
7 years
$150
A competitive rate and the ability to offset your car’s carbon emissions for the loan term.
IMB Secured Personal Loan
From 7.39% (fixed)
7.74%
$2,000
1 to 5 years
$250
A secured loan from IMB with flexible repayment features
Latitude Personal Loan (Secured)
From 12.99% (fixed)
14.2%
$3,000
2 to 7 years
$250 (Loans under $4000 - $140)
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.
MyState Secured Personal Loan
From 7.99% (variable)
8.96%
$10,000
1 to 10 years
$200
Apply for a loan up to $75,000 and use the funds for any purpose.
NRMA New Car Loan
From 7.49% (fixed)
8.03%
$15,000
1 to 7 years
$378
Purchase a new car with an NRMA Car Loan with a fixed rate term and no monthly fees. NRMA Members could save 1% on loan rates.
St.George Secured Personal Loan - Fixed Rate
From 8.49% (fixed)
9.6%
$3,000
1 to 5 years
$195
Get behind the wheel of your perfect car with a competitive interest rate from St.George. Get an application response within 60 seconds.
Bank of Melbourne Secured Personal Loan
From 6.99% (fixed)
8.11%
$3,000
1 to 5 years
$195
A low rate personal loan from Bank of Melbourne with variable or fixed option.
St.George Secured Personal Loan - Variable Rate
From 12.74% (variable)
13.81%
$3,000
1 to 7 years
$195
A lower interest rate personal loan with flexible repayment options.

Compare up to 4 providers

Rates last updated June 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)
12.77%
$5,000
3 to 5 years
$199 (monthly fees waived in the first year)
Borrow up to $75,000. All approved applicants will receive the advertised variable rate of 11.99% 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.
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.
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.
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
MyState Unsecured Personal Loan
From 12.99% (variable)
16.42%
$3,000
1 to 7 years
$200
Apply for up to $50,000 and make additional repayments without penalty.
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.
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
St.George Get Set Loan Personal Loan
From 17% (variable)
$5,000
$150
A revolving line of credit that lets you access your funds as and when you need to.
Bank of Melbourne Unsecured Personal Loan
From 12.99% (variable)
14.06%
$3,000
1 to 7 years
$195
An unsecured personal loan that gives you a choice between a fixed or variable rate.
BankSA Unsecured Personal Loan
From 12.99% (variable)
14.06%
$3,000
1 to 7 years
$195
BankSA allows you to borrow up to $40,000 with your choice of a fixed or variable rate.

Compare up to 4 providers

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.

Was this content helpful to you? No  Yes

Related Posts

RateSetter Personal Loan

Ratesetter allow you to get a personalised rate based on your credit score.

Citi Personal Loan Plus

Borrow up to $75,000. All approved applicants will receive the advertised variable rate of 11.99% p.a.

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

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

MyState Unsecured Personal Loan

Apply for up to $50,000 and make additional repayments without penalty.

Ask a Question

You are about to post a question on finder.com.au

  • Do not enter personal information (eg. surname, phone number, bank details) as your question will be made public
  • finder.com.au is a financial comparison and information service, not a bank or product provider
  • We cannot provide you with personal advice or recommendations
  • Your answer might already be waiting – check previous questions below to see if yours has already been asked

Disclaimer: At finder.com.au we provide factual information and general advice. Before you make any decision about a product read the Product Disclosure Statement and consider your own circumstances to decide whether it is appropriate for you.
Rates and fees mentioned in comments are correct at the time of publication.
By submitting this question you agree to the finder.com.au privacy policy, receive follow up emails related to finder.com.au and to create a user account where further replies to your questions will be sent.

Ask a question
feedback