Secured Personal Loans

Secured personal loans let you borrow against your car or other asset in return for a lower interest rate. Compare secured loans in Australia with Mozo and find a loan to fit your borrowing needs.

Read more

What’s the difference between secured and unsecured loans?

A secured loan is a loan when an asset owned by you is put up as security for 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. An unsecured loan is where you don’t have to put up any collateral for the loan but because there is higher risk, you generally have to pay a higher interest rate. 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 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-rates, on the other hand, are generally higher, but once you lock in a rate it won’t change, which means your loan repayments will stay the same.

Can I repay a secured loan out early?

Yes, but you may have to pay a fee and/or it will depend on how much time is left on the personal loan. Some lenders will waive fees if there are less than 6 months left. 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 so this is a more expensive option.

Secured personal loan comparisons on Mozo  - page last updated November 18, 2019

interest rate
comparison rate*
monthly repayment**

I want to borrow

years

  • Sponsored Deal

    5.75% p.a.to 19.99% p.a.

    6.89% p.a.to 23.07% p.a.based on $30,000
    over 5 years

    Details
  • 5.50% p.a.

    5.85% p.a.based on $30,000
    over 5 years

    Terms from 1 to 7 years. Representative example: a 5 year $30,000 loan at 5.50% would cost $34,632.09 including fees.

      Compare
    Details
  • 5.64% p.a.

    5.99% p.a.based on $30,000
    over 5 years

    Terms from 1 to 10 years. Representative example: a 5 year $30,000 loan at 5.64% would cost $34,748.53 including fees.

      Compare
    Details
  • 4.69% p.a.

    7.16% p.a.based on $10,000
    over 3 years

    Terms from 1 to 10 years. Representative example: a 3 year $10,000 loan at 4.69% would cost $11,119.49 including fees.

      Compare
    Details
  • 7.99% p.a.

    8.35% p.a.based on $30,000
    over 5 years

    Terms from 1 to 10 years. Representative example: a 5 year $30,000 loan at 7.99% would cost $36,738.90 including fees.

      Compare
    Details
  • 8.49% p.a.

    9.60% p.a.based on $30,000
    over 5 years

    Terms from 1 to 5 years. Representative example: a 5 year $30,000 loan at 8.49% would cost $37,836.08 including fees.

      Compare
    Details

Want more personal loan options?

Browse all 217 personal loans in Mozo's comparison database

Your selected home loans

*The Comparison Rate combines the lender's interest rate, fees and charges into a single rate to show the true cost of a personal loan. The comparison rates displayed are calculated based on a loan of $30,000 for a term of 5 years or a loan of $10,000 for a term of 3 years as indicated, based on monthly principal and interest repayments, on a secured basis for secured loans and an unsecured basis for unsecured loans. WARNING: This comparison rate applies only to the example or examples given. Different amounts and terms will result in different comparison rates. Costs such as redraw fees or early repayment fees, and cost savings such as fee waivers, are not included in the comparison rate but may influence the cost of the loan.

**Representative example figures and monthly repayment figures are estimates only, based on the advertised rate, mandatory fees, loan amount and term entered. Rates, fees and charges and therefore the total cost of the loan may vary depending on your loan amount, loan term, and credit history. Actual repayments will depend on your individual circumstances and interest rate changes.

^See information about the Mozo Experts Choice Awards for Personal Loans

Switch & Save Calculator

How much could you save by switching your personal loan? Compare savings from over 200 personal loans. Find out in a few clicks.

Get started

Advertisement
NEW Mozo Rate Matcher

We can match you to rates that fit.

Personal loan resources

Reviews, news, tips and guides to help find the best personal loan for you.

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 individual 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 (otherwise known as a collateral loan) if you have something to bring to the table like a car or property and use it
as security for the loan, you'll 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 actually use the new vehicle you're purchasing as security.

Plus, you can use a secured loan to consolidate your current debt, like a credit card, store card or car loan debt into one easy to manage low rate loan.

Find out more about debt consolidation. But if you don't have any assets to secure the loan with, then you'll need to look for an unsecured loan, which doesn't require security 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?" 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 usually more competitive interest rates 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:

  • So far, a secured loan may sound pretty tempting, but we should warn you, if you find that your repayment schedule is stretching your budget too far and you can no longer service the loan, 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 must hold a considerable amount of equity in your property to use these assets as security for the loan.

How much can you borrow?

You can avoid putting your assets at risk by making sure you can afford the amount you want to borrow. 

For example, if you crunch the numbers and find you can only afford $500 coming out of your piggy bank each month, you'll need to make sure the total sum you take out, and the timeframe of the loan will ensure you're not paying over that amount each month.

You can work out how much you can afford to borrow by having a play with Mozo's repayments calculator.

Secured vs. unsecured personal loans: What’s the difference?

Secured loan:

A secured loan requires you to put an asset up as security against the loan, which the lender can repossess to recoup its losses in the event that 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 your asset if you ever default on the loan. The trade-off for this peace of mind, however, is usually higher interest rates, because, without a security item, there’s more at stake for the lender.

Make sure you check out our guide for more information on all the different types of personal loans.

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

When it comes to secured personal loan interest rates, most lenders generally offer both a fixed-rate and a 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, however, once you’re locked in with a fixed-rate loan, the interest rate, and thus, your loan repayments won’t change.

Can I pay off a secured personal loan early?

Yes, you can pay a secured personal loan off early, however, depending on the lender you’re with, there might be fees involved to do so or certain 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, while 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. And 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 this will 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 then you can use the property’s 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, and provide 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, then the lender is required to return the goods to you. If you don’t pay off any outstanding payments within 21 days, then the lender will proceed to 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:

  • 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 counseller 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 to 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.

Written by: Kelly Emmerton, Mozo Money Editor

More FAQs about secured personal loans

What should I look for in a secured personal loan?

When taking out a secured loan you'll usually be given the option to decide whether you want a variable rate that changes 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: Whereas a fixed rate loan protects you against rate rises but may mean you forfeit these flexible features and you could incur a break cost fee if you try to pay out the loan early.
  • Comparison rate: And don't forget to check the distant cousin of the interest rate - the comparison rate, which takes into account both the interest rate and the fees to allow you to quickly compare loans. All lenders are required to publish the comparison rate so that you can assess the full cost of the loan and not be swayed by a loan that has a low-interest rate but high ongoing 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 will 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 or hey maybe you just want to revamp your living space.

Do secured loans have fees?

Yep, here are some you may need to budget for:

Application fee: Some providers charge a one-off fee, anywhere between $200-$500 for processing your application to cover costs like general administration and accessing your credit report.

Ongoing fee: Usually charged on a monthly basis, an ongoing fee will generally be much lower than the application fee, however, keep in mind if you take out a loan over a long period it could end up costing you far more. 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 ongoing repayments, you could be hit up with a late payment fee and the nasty thing about these fees is you'll continue to be charged until you are 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?

Well, it depends on your circumstances. Here are the different options to help you find the best secured loan deal for 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.
  • Are you interested in switching loans? 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 and the more times providers run a credit check (or worse reject you for a loan) the worse your credit history will look.

So before you apply for a secured loan, we recommend you take the time to look up your credit report by visiting websites like mycreditfile.com.au and checkyourcredit.com.au and check if your credit report is actually correct, because 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 is that 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

Suncorp
Suncorp Unsecured Personal Loan review
Overall
4/10
Great customer service, but poor terms.

Fixed interest rate at around 15% was ridiculous. Plus monthly account keeping fees. When...

Fixed interest rate at around 15% was ridiculous. Plus monthly account keeping fees. When compared with others I was disappointed.

Price
2/10
Features
-1/10
Customer service
8/10
Convenience
1/10
Trust
6/10

Mike | Victoria

reviewed about 6 hours ago

SocietyOne
SocietyOne Personal Loan review
Overall
10/10
Great rate and a too easy application.

I have just paid off a 3 year loan and have been approved for another. I am very happy with the...

I have just paid off a 3 year loan and have been approved for another. I am very happy with the rate and how easy it was considering I don't bank with them and the bank I have been banking with for 25 years declined my application.

Price
10/10
Features
10/10
Customer service
10/10
Convenience
10/10
Trust
10/10

Kylie | Queensland

reviewed about 6 hours ago

Westpac
Westpac Personal Loan review
Overall
7/10
Fast.

Fast and easy application process and because I am an existing customer the money was in my...

Fast and easy application process and because I am an existing customer the money was in my account within 2 hours of my online application.

Price
7/10
Features
2/10
Customer service
4/10
Convenience
10/10
Trust
10/10

Elizabeth | Queensland

reviewed 4 days ago