Secured Personal Loans

A secured personal loan allows you to leverage an asset, like a car, as collateral for borrowing funds. Explore a wide array of loan options at Mozo to find your match!

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Last updated 17 February 2025 Important disclosures and comparison rate warning*
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Knowledge Hub

What is a secured personal loan?

A secured loan is an amount of borrowed money from a lender that’s backed by a personal asset. 

 In brief, secured loans: 

  • allow you to borrow against assets, be it your property, car or even jewellery. 
  •  may require value assessments and additional proof and documentation of your assets. generally involve a longer approval process. 
  • tend to come with lower interest rates than unsecured loans
  • can sometimes be offered in larger amounts due to the security of the asset(s). 

What do people use secured personal loans for? 

Secured loans are versatile, though are commonly used to buy cars and other vehicles given that they can act as security for the very same purchase.  

They can also be used to consolidate existing debts. This means bringing together debts such as credit card debt, store cards and car loans into one singular loan so it’s easier to manage. This is referred to as a debt consolidation loan.

What to look for in a secured personal loan 

There are always risks to borrowing money, but a secured loan raises the stakes a bit. For example, if you default the lender has the right to repossess your secured asset(s) to recoup its losses. So, before applying for a loan, work out if you can afford to pay it back.  

The top factors that will impact your repayments are: 

  • Interest rates 
  • Loan term 
  • Loan amount 

How to compare secured personal loans 

Doing a few basic repayment calculations is a great place to start with your comparison. Try adjusting the numbers on a couple of different loans such as interest rates or loan terms to see how your repayments can be impacted. 

Here’s an example:

Loan 1: 10.05% p.a. interest rate
Loan 2: 8.50% p.a. interest rate
Amount:
$20,000
$20,000
Interest rate:
10.05% p.a.
8.50% p.a.
Term: 
3 years
3 year
Monthly repayment:
$646.00
$631.00
Total interest paid:
$3,429.00
$2,729.0

As we can see here, a slight interest rate shift can greatly impact the cost of your overall repayments. Try our personal loans calculator yourself.

Pros and cons of secured personal loans 

Pros: 

  • Typically a more competitive interest rate and lower fees because the lender considers you to be a lower risk. 
  • Secured loans commonly have higher borrowing limits and longer timeframes. 
  • They can be a good option if you are self-employed and have assets such as property but difficulty demonstrating a regular income. 

Cons: 

  • The lender has the right to take possession of your secured assets if you miss repayments. 
  • The approval process is likely to take longer than for an unsecured loan as it may require value assessments and additional documentation of your assets. 

Bottom line: Having a good credit history 

Generally, the better your credit history is, the better your chances of being approved for a personal loan. Further still, good credit puts you in position to potentially nab a better interest rate. If you’re good with your money, pay bills on time and don’t overextend yourself financially, you should be in good shape. 

If you have any doubts about this however, a financial advisor can help. Otherwise if you’re ready to find a loan, Mozo is here to lend a hand. Start comparing secured loans on our personal loans hub page now!

FAQs about secured personal loans

What assets can I use to secure a personal loan?

This will depend on the lender and loan product. Generally speaking, the following assets can be used:

  • New or used cars
  • Other vehicles such motorcycles or boats
  • Property
  • High value items such as art, jewellery or antiques
Can I pay off a secured personal loan early?

Yes, you can pay off secured personal loans early. However, depending on the lender you’re with and the loan, there might be fees involved. There might also be restrictions based on the amount of time you have left on your loan term. Keep in mind, variable rate loans tend to offer more flexible features, like early repayments. Fixed rate loans can be stricter on this sort of thing and there can be additional fees involved, like break costs and/or early payment penalty fees.

What happens if I default on a secured personal loan?

If you’re unable to meet your repayments and default on a secured personal loan, the lender has the right to repossess and sell your asset to recover the loss. This is unfortunate, but it’s also the risk that comes with the lower interest rates of a secured loan. If you feel like you could be in danger of defaulting on a loan, you may be able to reach an agreement with your lender due to financial hardship. You may also want to consider seeking financial assistance.

How to compare secured personal loans?

You can use our secured personal loan comparison table to compare secured personal loan products and lenders until you’ve found one that best suits your financial needs and budget. We also pick the top loans in our Mozo Experts Choice Awards. Most lenders generally offer both fixed and variable rate options. Remember, variable rates can change at any time in line with official cash rate movements, while fixed rates won’t change once you're locked in.

Do secured loans have fees?

Yes, there are likely to be a few fees. Here are some you may need to budget for:

Application fee: Some providers charge a one-off fee to process your application and cover costs.

Ongoing fee: Usually charged monthly, an ongoing fee will generally be much lower than the application fee. 

Break cost fee: Be sure to find a loan that offers fee-free extra repayments and charges a minimal penalty for exiting the loan before the agreed timeframe.

Late payment fee: If you can't keep up with your repayments, you could be hit up with a late payment fee.

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

There’s one major difference: unsecured loans don’t require collateral and, as such, usually come with higher interest rates because there’s more at stake for the lender. To assess an unsecured loan, the lender often goes by the strength of your cash flow as security, instead of physical assets. These are typically for smaller amounts ($100k or less) as well. Learn more about the different types of personal loans with our guide.

JP Pelosi
JP Pelosi
RG146
Managing editor

Managing Editor Jean-Paul (JP) Pelosi leads the editorial team, with over 20 years of experience writing for top outlets like The Guardian, The Sydney Morning Herald and News.com.au. JP's expertise in home loans and property is complemented by his rich background at major financial firms including CommBank, Suncorp and Amex. Holding a Master's in Communications and international experience in journalism, JP combines passion with skill and has a unique ability to apply this editorial experience and financial knowledge to advise the team on how to create engaging financial content for Australian consumers.

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