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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secured personal loans

Secured personal loan comparisons on Mozo - last updated 22 February 2024

Search promoted personal loans below or do a full Mozo database search. Advertiser disclosure
  • Secured Personal Loan

    interest rate
    comparison rate
    Monthly repayment
    6.57% p.a.to 8.48% p.a.
    7.19% p.a.to 8.84% p.a.based on $30,000
    over 5 years

    Competitive fixed interest rates for eligible borrowers. Borrow up to $75,000, secured, over terms of 1 to 7 years with flexible repayment terms. Fast, 100% online application. No monthly account keeping fees. Winner of of Mozo's Experts Choice Excellent Credit Secured Personal Loan 2024 awards ^.

    Repayment terms from 1 year to 7 years. Representative example: a 5 year $30,000 loan at 6.57% would cost $35,528.12 including fees.

    Compare
    Details
  • New Car Loan - Special

    Including Demo, Fixed, Secured

    interest rate
    comparison rate
    Monthly repayment
    8.29% p.a.
    9.40% 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^. Good credit history. Stable employment history and Australian citizenship or PR required.

    Repayment terms from 3 years to 7 years. Representative example: a 5 year $30,000 loan at 8.29% would cost $37,627.84 including fees.

    Compare
    Details
  • Express Personal Loan

    Secured

    interest rate
    comparison rate
    Monthly repayment
    14.95% p.a.to 27.95% p.a.
    29.30% p.a.to 42.8% p.a.based on $10,000
    over 3 years

    Access fast finance on loans from $5,000 to $25,000 with a Jacaranda Finance Personal Loan. Terms from 24-48 months. Check if you qualify with no impact on your credit score. Enjoy a speedy, online approval.

    Repayment terms from 2 years to 4 years. Representative example: a 3 year $10,000 loan at 14.95% would cost $14,324.71 including fees.

    Compare
    Details
  • Clean Green Car Loan

    New or Used, Fixed, Secured

    interest rate
    comparison rate
    Monthly repayment
    7.29% p.a.
    8.41% p.a.based on $30,000
    over 5 years

    Get a 1% 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^. Good credit history. Stable employment history and Australian citizenship or PR required.

    Repayment terms from 3 years to 7 years. Representative example: a 5 year $30,000 loan at 7.29% would cost $36,768.95 including fees.

    Compare
    Details
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^See information about the Mozo Experts Choice Personal loans Awards

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Understanding secured personal loans

Personal loans aren’t a one size fits all product. 

Today, they come in many forms to suit the needs of each borrower. Finding the right loan is important, potentially saving you big bucks in interest or even gaining you some much-needed flexibility.

One of the main things you’ll hear when it comes to loans is the distinction between secured and unsecured loans. It can be a little daunting if you’re new to personal finance or not familiar with loans.

If you’ve heard the word "secured" thrown around while looking at loans and are wondering what you’re dealing with, we’re here to help break things down for you.

What is a secured personal loan?

Think of security on a loan like collateral on a poker game. If you have something to bring to the table, it can be used for its monetary value.

Likewise, if you have a secured loan, a valuable possession (like a car or property) might mean a better interest rate and lower fees.

Secured loans aren't only available for your current assets. Secured loans are very common when it comes to car loans, which are often secured against the car you’re purchasing with the loan. Motorcycle loans and caravan loans operate similarly - vehicles are often used as security on the loans used to purchase them, and can also be used as collateral on other loans due to their high monetary value.

If you’re feeling the weight of multiple debts accruing, you can also use a secured loan to consolidate your current debt. This means bringing together debts like a credit card, store debt and car loan into one singular loan, making it easier to manage. This is referred to as a debt consolidation loan. 

If you don't have any assets to secure a loan with and aren’t planning on using it to buy any large value assets, you'll need to look for an unsecured loan. These don’t require collateral to take out the loan and as a result, often have higher interest rates.

The pros & cons of secured personal loans

This might all have you thinking “Better interest rates? Lower fees? Now then...where do I sign up?” In fact, there’s a little more to secure personal loans than that. It’s important to make sure you factor in all the pros and cons before deciding to take out a secured personal loan:

Pros:

  • The major benefit of a secure 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 the security assures the lender that you will do everything in your power to repay the loan to keep your assets.
  • 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 on time and in full. They can also be an easier option if you are in a position with difficulty demonstrating your income, for instance if you are self-employed.

Cons:

  • The biggest risk with securing a loan is what happens if you can’t make your repayments. 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 whatever you put up as security - which could be 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 meet certain conditions.
  • To use a house as a security asset against a loan, you'll first need to hold considerable equity in your property.

How much can you borrow?

To avoid putting your assets at risk, it’s extremely important to make sure you can afford the amount you want to borrow. Use Mozo’s personal loan repayments calculator to work out how much you can afford to borrow, and find loans that meet your requirements.

For example: If you crunch the numbers and find you can 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.

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 make up for their 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 there’s more at stake for the lender without security at play.

Learn more about the different types of personal loans with our guide.

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 they can change at any time. Depending on your financial situation, these may be a good choice for you.

Fixed rate:

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

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 you have selected, there might be fees involved in doing so. There also might 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 often there are additional fees involved, like break costs and/or early payment 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 second-hand set of wheels, then you can likely use the used vehicle to secure the loan. Generally, the age cut-off for used cars is around 7-10 years old, but this depends on the lender.
  • Other vehicle: If you’re applying for a loan on a motorcycle, boat, caravan or other specialty vehicle, these can often be eligible as collateral for the loan in the same way as a car can.
  • 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 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 this happens, not only will you lose that sweet new car you took a loan out on, but your credit score will also take a hit. This will in turn impact your future ability to borrow and any rates you qualify for at a later date. 

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.

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

If your asset is repossessed, there is a set course of events that must take place. Within 14 days of 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 as well as 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 can 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. A secured loan raises the stakes 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 should also make sure that you’re choosing the right type of loan for your needs - whether this is a debt consolidation loan or a car loan, the options continue to expand and it’s important to end up with the right fit for you.

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 have also compiled Mozo’s picks for the best personal loans.

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JP Pelosi
RG146
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

Commonwealth Bank Secured Personal Loan (Fixed)
Overall 7/10
Convenient bank with great online services

Commbank has a great reputation, good customer service and app is excellent, very convenient experience.

Read full review

Commbank has a great reputation, good customer service and app is excellent, very convenient experience.

Price
8/10
Features
4/10
Customer service
10/10
Convenience
10/10
Trust
9/10
Less
William, New South Wales, reviewed 2 days ago
Commonwealth Bank Unsecured Personal Loan
Overall 5/10
Middle class mayhem

I find securing an unsecured personal loan is easy, but that's because the interest rate is alot higher and the more desperate you are for fast cash, the unsecured loan is the option due to urgency I feel banks play on this factor. With secured personal loans they don't give you a great option as your car has to be 5 years or less old to snatch a great secured loan rate. It sets us middle class people strapped for cash vulnerable and limited which plays in the banks favour.

Read full review

I find securing an unsecured personal loan is easy, but that's because the interest rate is alot higher and the more desperate you are for fast cash, the unsecured loan is the option due to urgency I feel banks play on this factor. With secured personal loans they don't give you a great option as your car has to be 5 years or less old to snatch a great secured loan rate. It sets us middle class people strapped for cash vulnerable and limited which plays in the banks favour.

Price
3/10
Features
4/10
Customer service
5/10
Convenience
10/10
Trust
4/10
Less
Natasha, New South Wales, reviewed 8 days ago
BankSA Personal Loan
Overall 9/10
all round great bank

great bank with loans easy to consolidate- online processess are easy

Read full review

great bank with loans easy to consolidate- online processess are easy

Price
7/10
Features
7/10
Customer service
9/10
Convenience
10/10
Trust
10/10
Less
Nikkita, South Australia, reviewed 8 days ago

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