Secured Personal Loans

If you’re in need of a big sum of money, you might like to find out more about how you can compare secured personal loans. We’re here to run you through the ins and outs of secured personal loans, what you could use them for, the features they have, and how you can apply for one.

*iSelect (through its wholly owned subsidiary, Tyrian Pty Ltd) and Fair Comparison Pty Ltd (which operates this credit product comparison) may receive a commission if users click through, apply, or successfully qualify, for a loan or credit card product from or through a provider.

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Advertised ProductProduct Image For OurMoneyMarket - Personal Loan - Secured | Fixed

OurMoneyMarket - Personal Loan - Secured | Fixed

Advertised Rate

From 6.57% p.a. to 18.99% p.a.

Comparison Rate

From 7.19% p.a. to 21.78% p.a.
A Secured loan with an advertised rate from 6.57% p.a. and comparison rate from 7.19% p.a.
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Showing personal loans based on borrowing $20,000 over 3 years, showing secured only loans, with fixed and variable interest rates
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  • Comparison Rate
  • Advertised Rate

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Secured personal loans

It might be time for you to get something BIG, and by BIG, we mean one of those things that create a new chapter in your life.

It might be a car, a boat, or a grand piano.

Whatever BIG purchase you’re going to make, it might be time to compare secured personal loans.*

What is a secured personal loan?

Under a secured personal loan, an asset is used as collateral for the loan. This means that if you’re unable to make your repayments, the lender can repossess the asset in order to make up for their losses.

These loans generally have higher borrowing limits, lower interest rates, and longer loan terms when you compare them with unsecured loans.

As an example, the car you’re purchasing under a secured personal loan could be the asset you use in case you’re unable to continue paying it off. In this worst case scenario, your lender would claim your asset and write off your repayments that you’re unable to make.

When could I consider a secured personal loan?

If you’re looking at buying something expensive, like a car, then a secured personal loan could be the way to go. These loans are perceived as lower-risk to lenders because if you reach a point where you’re no longer able to make your repayments, then the lender has an asset they can take and sell.

When you think about it, it makes sense that lenders perceive secured loans as less of a risk for them, as you are more likely to make repayments when you have an asset on the line.

What are the typical features of a secured personal loan?

Although these types of loans are usually secured against major assets like a car or a house, ultimately, you can secure this type of loan on almost anything you’d like to purchase, as long as you have something of equal or greater value to secure it against.

You can generally borrow from $2,000 to $100,000, but this depends on your personal situation. The amount will vary, so it’s important you discuss this with your lender.

Further features of secured personal loans are listed in the table below:

Comparison rate- This is the whole cost of the loan, which includes the interest rate and most of the fees.
- When you compare loans, make sure you’re looking at the same loan amounts and terms.
Interest rate- This is the rate of interest you’ll need to pay based on the amount you borrow.
Application fee- Many banks and financial institutions have application fees.
Additional fees- Check if there’s a monthly service fee.
- There might also be a default or missed payment fee.
- Check the T&Cs to see if there are any other fees.
Extra repayments- Some lenders charge a fee if you’d like to make extra repayments, so check this with your lender.
Loan use- Major purchases such as a a car or major home renovations.
Loan terms- Usually one to seven years.
Redraw facility- A redraw facility allows you to access funds you’ve already paid off, but sometimes there are additional fees to access this facility.
- With some loans, you may be able to earn back a portion of the extra repayments you make.

What are the pros and cons of a secured personal loan?

Generally, the good things about a secured personal loan are:

  • you can typically borrow more than you would under an unsecured personal loan;
  • you are more likely to have a lower interest rate; and
  • you could have more time to pay it off.

There are some downsides, too. Consider that:

  • If you don’t consistently make your repayments, you could potentially lose your asset.
  • You might like that you have more time to pay it off, but you might also accrue more interest payments in the long run.
  • You might only be able to use certain assets as security against the loan, so you might not be able to use that family heirloom that’s gathering dust in the basement.

Am I eligible for a secured personal loan?

If you’ve got a good credit rating and a steady credit history, it’s likely you’d be eligible. You’d need to speak with your lender for more tailored advice.

But if you find yourself in a position where you need a guarantor for your loan, it’s important that you and your potential guarantor both understand what’s involved with this process. Have a read through the Australian Government’s Moneysmart page on guarantors on loans here.

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

Under the conditions of an unsecured loan, you won’t need to provide any assets as collateral in the event of a default, whereas under a secured loan type, you do.

Unsecured loans are generally good options if you’re looking for a small loan for a short period of time.

But bear in mind that the interest rates for unsecured loans are usually higher, because the risk to the lender is higher. You might also need a guarantor on your application if this is your first loan.

How do I apply for a secured personal loan?

Once you’ve compared our range of providers, you might be ready to apply for a particular loan.*

In your application, you might need to provide things like recent bank statements, payslips, phone or energy bills, or rental or mortgage repayments to prove you’re responsible and a low-enough risk for your lender to bank on you (pun intended).

Your lender may then perform a credit check before they approve your loan.

You might also need a guarantor, but this is only if your lender won’t give you a loan on your own. It’s important that you and your potential guarantor know exactly what’s involved in this process. For more information, check out the Australian Government’s Moneysmart page on guarantors in loans.

This whole process all depends on your unique situation, which includes your circumstances and personal financial goals.

Ready to compare?

If you’re ready to compare secured personal loans, you can start here online with iSelect*. See the range of providers and simply click on an option that suits you to begin your application.

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