Secured Personal Loans

A secured personal loan lets you use an existing asset such as a car as security to borrow money. In return, you generally pay a lower interest rate as there is less risk to a lender. Compare secured loans in Australia with Mozo and use our expert tables and reviews to find a loan to fit your needs.

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secured personal loans

Secured personal loan comparisons on Mozo - last updated 1 July 2022

Search promoted personal loans below or do a full Mozo database search . Advertiser disclosure
  • New Car Loan - Prime Special

    Including Demo, Fixed, Secured

    interest rate
    comparison rate
    Monthly repayment
    6.09% p.a.
    6.64% p.a.based on $30,000
    over 5 years

    Low fixed car loan rate for purchasing new and demo vehicles from dealers. There is no monthly or ongoing fees and early payout options available. Winner of Mozo's Experts Choice Car Loan 2021 award^.

    Repayment terms from 3 years to 5 years. Representative example: a 5 year $30,000 loan at 6.09% would cost $35,274.42 including fees.

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  • Mozo Expert Choice Badge
    Car Loan

    Fixed, Secured

    interest rate
    comparison rate
    Monthly repayment
    5.35% p.a.
    5.65% p.a.based on $30,000
    over 5 years

    Available for all New and Used cars up to 7 years. A quick and easy, 100% online application with loans up to $75,000. No printing. No paper. No fuss. No monthly account keeping fees, no exit fees and no early repayment fees.

    Repayment terms from 1 year to 7 years. Representative example: a 5 year $30,000 loan at 5.35% would cost $34,507.61 including fees.

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  • Clean Green Car Loan

    New or Used, Fixed, Secured

    interest rate
    comparison rate
    Monthly repayment
    5.89% p.a.
    6.44% p.a.based on $30,000
    over 5 years

    No monthly or ongoing fees. Get a 0.70% discount on your car loan interest rate if you buy a qualifying green car. Winner of Mozo's Experts Choice Green Car Loan 2021 award^.

    Repayment terms from 3 years to 5 years. Representative example: a 5 year $30,000 loan at 5.89% would cost $35,107.05 including fees.

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  • Personal Loan

    Variable

    interest rate
    comparison rate
    Monthly repayment
    5.75% p.a.to 25.99% p.a.
    6.68% p.a.to 29.2% p.a.based on $30,000
    over 5 years

    Repayment terms from 2 years to 7 years. Representative example: a 5 year $30,000 loan at 5.75% would cost $35,669.18 including fees.

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^See information about the Mozo Experts Choice Personal loans Awards

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Understanding secured personal loans

Personal loans are no longer a one size fits all bank product. Today, they come in many forms (e.g. Secured, unsecured, debt consolidation) to suit the needs of each borrower.

With more choice now than ever, if you find the right loan, you could potentially save yourself big bucks in interest or even gain some much-needed flexibility.

So if you've heard the term "secured" thrown around and are wondering what the deal is, we will help break it down for you:

What is a secured personal loan?

Just like in a game of poker, with a secured loan (also known as a collateral loan), if you have something to bring to the table like a car or property and use it
as security against the loan, then you might get dealt a better interest rate and lower fees.

Secured loans aren't only available for your current assets, either. If you're taking out a loan to cover the cost of a car, you can usually use the new vehicle you're purchasing as security.

You can also use a secured loan to consolidate your current debt, like a credit card, store card or car loan debt, into one easy to manage loan. Find out more about debt consolidation

But if you don't have any assets to secure the loan with, you'll need to look for an unsecured loan, which doesn't require collateral to take out the loan.

The pros & cons of secured personal loans

Before you think, "Yep, a secured personal loan sounds awesome. Where do I sign up?" First, make sure you factor in all the pros and cons before deciding to take out a secured personal loan:

Pros:

  • As mentioned above, the major benefit of securing your personal loan is that you usually get a more competitive interest rate and lower fees because the lender will consider you to be a less risky borrower. 
  • Secured loans typically have higher borrowing limits and longer timeframes, as your assets assure the lender that you will do everything in your power to repay the loan to avoid losing your much-loved possessions.
  • Taking out a secured loan can also be a great way to build up your credit score and show lenders that you're a prime candidate for future borrowing if you pay your monthly repayments in full.

Cons:

  • With a secured loan, if you find that your repayment schedule is stretching your budget too far and you can no longer service the loan, then the lender has the right to recover their losses by repossessing your car or even your home.
  • If you are taking out a secured personal loan to purchase a vehicle, most providers will require the car to be relatively new and
  • To use a house as a security asset against the loan, you'll first need to hold considerable equity in your property.

How much can you borrow?

To avoid putting your assets at risk, first, make sure you can afford the amount you want to borrow. 

For example: If you crunch the numbers and find you can only afford to pay $500 each month, you'll need to make sure the loan amount and term you choose don't exceed this amount each month.

  • Repayments calculator: Use Mozo's repayments calculator to work out how much you can afford to borrow.

Secured vs. unsecured: What’s the difference?

Secured loan:

A secured loan requires you to put an asset up as security against the loan. However, this means that the lender can repossess this asset to recoup its losses if you miss repayments and default on the loan.

On the flip side, with less risk involved for the lender, secured loans generally offer better interest rates.

Unsecured loan:

Unsecured loans don’t require collateral, so you won’t have to worry about potentially losing an asset if you ever default on the loan.

However, the trade-off for this is usually higher interest rates because, without a security item, there’s more at stake for the lender.

Be sure to check out our guide to learn more about the different types of personal loans.

What interest rate options are there for a secured personal loan?

When it comes to secured personal loans, most lenders generally offer both a fixed and variable-rate option.

Variable-rate:

Variable-rate secured loans usually offer lower interest rates than fixed-rate loans, but the catch is that they can change at any time.

Fixed-rate:

Fixed-rate loans generally come with higher rates, but the interest rate, and thus your loan repayments, won’t change once you're locked in.

Can I pay off a secured personal loan early?

Yes. However, depending on the lender you’re with, there might be fees involved in doing so or time 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 don’t always allow this, and when they do, there are often additional fees involved, like break costs and/or early penalty fees.

What assets can I use to secure a personal loan?

  • New car: If you’re buying a brand new car, you can generally use the new car as collateral against a secured personal loan. If you’ve got a car that’s two years old or less, then most lenders would still consider this to be a ‘new’ car and would allow you to use it to guarantee a secured personal loan.
  • Used car: By the same token, if you’re taking out a personal loan to buy a secondhand set of wheels, then you can likely use the used vehicle to secure the loan. Generally, the age cutoff for used cars is around 7-10 years old, but it'll depend on the lender.
  • Other valuable assets: If you own any high-value art, antiques, jewellery or any other expensive assets, then you might be able to use them to secure a personal loan.
  • Property equity: If you own a property, you might be able to use its equity to secure a personal loan.

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, then, unfortunately, the lender has the right to repossess and sell your security asset to recover the loss.

If this happens, not only will you lose your new set of wheels or whichever other assets you secured the loan with, but your credit score will cop a beating too.

What happens if I default on a loan and my asset is repossessed?

If your asset is repossessed, within 14 days after the repossession, your lender must send you a written notice informing you of:

  • The estimated value of the goods
  • Repossession costs
  • And any other ongoing costs

They must also provide you with a statement outlining your rights and obligations under the National Consumer Credit Code.

Your lender cannot sell your asset within 21 days of this written notice.

Can I get my repossessed goods back?

If you pay off the outstanding amount and any repossession or other costs within this 21-day period, the lender must return the goods to you. If you don’t pay off any outstanding payments within 21 days, the lender will sell the asset.

My asset has been repossessed - Where can I get help?

If your asset has been repossessed and you’re seeking help to get it back or resolve the issue, here are some of the different options available:

  • Australian Financial Complaints Authority: If you can’t reach an agreement with your lender, then one option is to lodge a formal complaint with the independent Australian Financial Complaints Authority (formerly known as the Financial Ombudsman Service), which you can do online or over the phone on 1800 931 678.
  • Legal advice: If you require legal advice but cannot afford to pay for a solicitor/lawyer, then you can seek out free legal advice from Legal Aid or a community legal centre. These free legal services can assist you in understanding your rights and explaining what your options are, depending on your situation.
  • Financial counsellor: An alternate option is to work with a financial counsellor who could potentially resolve the issue by negotiating with your lender on your behalf.

What to do before applying for a secured personal loan:

The first thing you should do before applying for a secured personal loan is determine whether you can afford to pay it back. Like with any loan type, there are always some risks involved when taking out a loan, but with a secured loan, the stakes are a bit higher.

If you default on a secured loan, the lender has the right to repossess your asset to recoup its losses, so it’s super important to shop around first and only apply for a loan once you’re certain you’ll be able to meet the repayments.

You can use our secured personal loan comparison table to compare loads of different loan products and lenders until you’ve found one that best suits your financial needs and budget.

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JP Pelosi
Managing editor

Jean-Paul (JP) Pelosi is an experienced journalist and editor who has contributed to many of Australia's leading media outlets including The Guardian, News.com.au, Domain.com.au, Investment Magazine and ANZ's Bluenotes. He has also edited news and communications for large financial services companies such as CommBank, Suncorp, Allianz and Amex. He loves a well told story and applying his editorial experience to content that readers both care about and enjoy. JP heads up our writing team.

More FAQs about secured personal loans

What’s the difference between secured and unsecured loans? 

  • Secured loan: A secured loan is a loan when you put up an asset you own as security against the loan. In return for putting up the asset as security, you generally pay a lower interest rate as there is less risk to a lender.
  • Unsecured loan: An unsecured loan is where you don’t have to put up any collateral for the loan, but you generally have to pay a higher interest rate because there is a higher risk. For more info, check out our guide on types of personal loans

What interest rate will I pay on a secured personal loan?

Most lenders will have a choice between a fixed interest rate and a variable interest rate.

  • Variable-rate: Variable-rate secured loans tend to have lower interest rates than fixed-rate loans. However, the trade-off is that they can change at any time.
  • Fixed-rate:  On the other hand, fixed-rate secured loans generally have higher rates, but once you lock in a rate, it won’t change, which means your loan repayments will stay the same. 

Can I pay a secured loan out early? 

Potentially, but you may have to pay a fee and/or it depends on how much time is left on the personal loan. Some lenders will waive fees if there are less than 6 months left on the term.

  • Variable-rate loans generally also have more flexibility with early payouts.
  • With fixed-rate personal loans, you’ll generally have to pay break costs on top of an early penalty fee, making it a more expensive option.

What should I look for in a secured personal loan?

When taking out a secured loan, you'll usually be given the option between a variable rate that can change with the market or a fixed interest rate that is locked in for the life of your loan.

  • Variable-rate: The benefit of a variable rate is generally lower rates and more flexible features like an extra repayments facility and redraw facility (see below).
  • Fixed-rate: A fixed-rate loan protects you against rate rises but may mean you forfeit these flexible features and could incur a break cost fee if you try to pay out the loan early.
  • Comparison rate: Don't forget to check the comparison rate, which takes into account both the headline interest rate and any fees. All lenders are required to publish the comparison rate so you can assess the full cost of the loan, or else you could be swayed by a loan that has a low-interest rate but high fees.

Other than interest rates, there are also a few features that could come in handy down the track:

  • Extra repayments: This feature could be your ticket to paying off your loan sooner, so make sure the secured loan you take out offers extra repayments without the slap of a fee. Say you borrow $20,000 with a 10% interest rate paid back over 3 years. By increasing your monthly repayments by just $100, you'll save yourself nearly $500 in interest and shave 5 months off the life of your loan.
  • Redraw facility: Another handy option to have is the ability to withdraw any extra repayments you've made in the case of an emergency.

Do secured loans have fees?

Possibly! 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 like general administration and accessing your credit report. This could be anywhere between $200-$500.

Ongoing fee: Usually charged monthly, an ongoing fee will generally be much lower than the application fee. However, keep in mind that it could end up costing you far more if you take out a loan over a long period. For instance, over 10 years, a $10 monthly fee will add up to a whopping $1,200.

Break cost fee: While exit fees on variable rate loans were banned in 2011, did you know you could still be charged for paying off your fixed-rate loan early? So make sure you sign up with a loan that offers fee-free extra repayments and doesn't charge a penalty for exiting your 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. The nasty thing about these fees is you'll continue to be charged until you're back on track with your repayments. So make sure before you take out a loan, you can reasonably afford the repayments by drawing up a budget.

How do I find the right personal loan for me?

It depends on your circumstances. Here are some ways you can find a secured personal loan deal to suit your situation:

  • On the hunt for a new loan? Use our personal loan comparison tool, which covers hundreds of loans from Australia's biggest banks to the smaller lenders like credit unions and peer to peer players.
  • Switch & save: Punch in your numbers into our Switch & Save Calculator to see the personal loans in Mozo's database that offer a better deal than your current loan and see how much you could save by making the switch.

What do I need to know about my credit rating?

Your credit rating can be damaged without you even knowing it. For instance, if you start applying for multiple loans in a short period of time, each provider will run a credit check on you, leaving their fingerprint on your report each time. The more times a provider runs a credit check (or worse, rejects you for a loan), the worse your credit history will look.

So before you apply for a secured loan, we recommend you use sites like mycreditfile.com.au or checkyourcredit.com.au to check your credit report. Check to make sure everything's correct. If they've got you listed in the red, or some of your details are wrong, then this could affect your chances of being approved for a loan.

Another reason you'll want to ensure your credit rating is in tip-top shape because some providers use a tier-based pricing system, which means the better your credit rating, the better the rate you'll be offered.

Does a secured loan get your tick of approval? Head up to the top of this page to kick off your comparison!

Personal Loan Reviews

Latitude Personal Loan
Overall 1/10
Do not trust Latitude Finance.

Latitude finance is an absolute disgrace. Do not use these guys for any of your loans or financial needs. Sneaky underhanded tactics to get more money out of you in any way they possibly can. Had to learn this the hard way. Don't make the same mistake I did, stay clear of these guys, they have no problem ruining you financially & lack any moral compass or ethical standard.

Read full review

Latitude finance is an absolute disgrace. Do not use these guys for any of your loans or financial needs. Sneaky underhanded tactics to get more money out of you in any way they possibly can. Had to learn this the hard way. Don't make the same mistake I did, stay clear of these guys, they have no problem ruining you financially & lack any moral compass or ethical standard.

Price
1/10
Features
1/10
Customer service
1/10
Convenience
1/10
Trust
1/10
Less
Tim, Queensland, reviewed about 1 month ago
Coles Unsecured Personal Loan (flybuys members rates)
Overall 1/10
Bad customer service

Tried to borrow $5000, very hard to understand the dialect from the o/s call centre and the slow response dragged the process out. Need more documents, sure but then they weren't signed though on my accountant stationary. Forwarded everything my accountant sent over a week ago but have heard nothing. In the two months this process has taken I've almost saved enough for the car repairs... so boo Coles

Read full review

Tried to borrow $5000, very hard to understand the dialect from the o/s call centre and the slow response dragged the process out. Need more documents, sure but then they weren't signed though on my accountant stationary. Forwarded everything my accountant sent over a week ago but have heard nothing. In the two months this process has taken I've almost saved enough for the car repairs... so boo Coles

Customer service
1/10
Convenience
1/10
Trust
3/10
Less
Jane, Queensland, reviewed about 1 month ago
St.George Personal Loan
Overall 8/10
Not bad but could be better

The interest rate does seem higher than other banks. I would love it to be more competitive

Read full review

The interest rate does seem higher than other banks. I would love it to be more competitive

Price
6/10
Customer service
7/10
Convenience
9/10
Trust
8/10
Less
Liza, New South Wales, reviewed 2 months ago

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