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

The primary difference is that a secured loan requires you to put up an asset as collateral to receive the funds. An unsecured loan does not require collateral.

Is a secured loan better for your credit score?

A secured loan isn't better or worse for your credit score than another type of loan. Applying for any loan may temporarily decrease your score, but by making regular, on-time repayments, you'll usually see a positive impact on your score in the long run.

Are secured loans hard to get?

Compared to unsecured loans, secured personal loans are typically easier to be approved for. This is because they are less risky for the lender - since they can claim your asset if you default on the loan.

What happens if I default on a secured personal loan?

If you end up defaulting on your loan, the lender can repossess and sell your asset to recoup their losses. This will also hurt your credit score. If you're struggling to repay you should speak to your lender and see if they have a financial hardship policy.

Secured personal loans: Compare rates, fees & features

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Product	Finder Score	Interest Rate (p.a.)	Comp. Rate (p.a.)	Application Fee	Monthly Fee	Monthly Repayment
OurMoneyMarket Secured Personal Loan ($5,000-$75,000) Fixed1 - 7 Years $5,000 - $75,000	Finder score 7.8 Great	Interest Rate (p.a.) 6.57% to 18.99%	Comp. Rate (p.a.) 7.19% to 21.78%	Application Fee 1.50% - 6% min. $250	Monthly Fee $0	Monthly Repayment $627.42	Go to site More Info Compare	loading Fetching your data...
Jacaranda Finance Secured Personal Loan Fixed25 Months - 3 Years $3,000 - $25,000	Finder score 2 Basic	Interest Rate (p.a.) 16.95% to 29.95%	Comp. Rate (p.a.) 32.99% to 45.50%	Application Fee $129 - $990	Monthly Fee $26	Monthly Repayment $773.83	Go to site More Info Compare	loading Fetching your data...
Driva Personal Loan Variable1 - 7 Years $2,001 - $75,000	Finder score	Interest Rate (p.a.) 6.57% to 36%	Comp. Rate (p.a.) 6.78% to 36%	Application Fee $0 - $395	Monthly Fee $0	Monthly Repayment $613.62	Go to site More Info Compare	loading Fetching your data...
CommBank Green Loan Fixed1 - 10 Years $5,000 - $30,000	Finder score 9.9 Excellent	Interest Rate (p.a.) 3.99%	Comp. Rate (p.a.) 3.99%	Application Fee $0	Monthly Fee $0	Monthly Repayment $590.39	More Info Compare	loading Fetching your data...
Auswide Bank Home Renovation Loan Fixed1 - 5 Years $3,000 - $100,000	Finder score 9.5 Excellent	Interest Rate (p.a.) 7.79%	Comp. Rate (p.a.) 8.49%	Application Fee $250	Monthly Fee $5	Monthly Repayment $637.60	Compare	loading Fetching your data...
ILLAWARRA Credit Union Online Personal Loan Package Variable1 - 5 Years $10,000 - $100,000	Finder score 9.3 Excellent	Interest Rate (p.a.) 6%	Comp. Rate (p.a.) 6.64%	Application Fee $200	Monthly Fee $5	Monthly Repayment $619.52	Compare	loading Fetching your data...
ILLAWARRA Credit Union Secured Fixed Rate Personal Loan (New) Fixed1 - 5 Years $10,000 - $100,000	Finder score 9.1 Excellent	Interest Rate (p.a.) 6.49%	Comp. Rate (p.a.) 6.77%	Application Fee $200	Monthly Fee $0	Monthly Repayment $619.02	More Info Compare	loading Fetching your data...
Heritage Bank Fixed Personal Loan Fixed1 - 7 Years $5,000 - $100,000	Finder score 9.1 Excellent	Interest Rate (p.a.) 8.99%	Comp. Rate (p.a.) 9.35%	Application Fee $250	Monthly Fee $0	Monthly Repayment $643.85	More Info Compare	loading Fetching your data...
Auswide Bank Personal Loan Fixed1 - 5 Years $3,000 - $100,000	Finder score 9.1 Excellent	Interest Rate (p.a.) 8.98%	Comp. Rate (p.a.) 9.68%	Application Fee $250	Monthly Fee $5	Monthly Repayment $648.76	More Info Compare	loading Fetching your data...
Regional Australia Bank Enviro Loan VariableUP TO 5 Years $500 -	Finder score 9.1 Excellent	Interest Rate (p.a.) 7.20%	Comp. Rate (p.a.) 8.54%	Application Fee $195	Monthly Fee $0	Monthly Repayment $625.41	More Info Compare	loading Fetching your data...
Newcastle Permanent Secured Personal Loan Fixed1 - 7 Years $5,000 - $100,000	Finder score 9.1 Excellent	Interest Rate (p.a.) 6.49%	Comp. Rate (p.a.) 6.84%	Application Fee $250	Monthly Fee $0	Monthly Repayment $620.55	More Info Compare	loading Fetching your data...
Greater Bank Secured Personal Loan Fixed1 - 7 Years $5,000 - $100,000	Finder score 8.9 Great	Interest Rate (p.a.) 6.78%	Comp. Rate (p.a.) 7.17%	Application Fee $275	Monthly Fee $0	Monthly Repayment $624	More Info Compare	loading Fetching your data...
Horizon Bank Loan Secured By Mortgage Variable1 - 5 Years $500 - $30,000	Finder score 8.9 Great	Interest Rate (p.a.) 6.29%	Comp. Rate (p.a.) 8.25%	Application Fee $250	Monthly Fee $0	Monthly Repayment $618.71	More Info Compare	loading Fetching your data...
bankWAW Fully Secured Personal Loan Variable1 - 7 Years $1,000 - $50,000	Finder score 8.8 Great	Interest Rate (p.a.) 6.84%	Comp. Rate (p.a.) 7.48%	Application Fee $150	Monthly Fee $0	Monthly Repayment $620.70	Compare	loading Fetching your data...
Goulburn Murray CU Secured Personal Loan Variable1 - 6 Years $1,000 - $150,000	Finder score 8.8 Great	Interest Rate (p.a.) 7.79%	Comp. Rate (p.a.) 8.04%	Application Fee $150	Monthly Fee $0	Monthly Repayment $629.48	More Info Compare	loading Fetching your data...

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The amount you can borrow often depends on the value of the asset you're using as security.
Loan amounts and terms vary, so comparing different lenders can help you find the best option.
Risk of losing your collateral exists if you default on the loan, so ensure you can manage the repayments.

What is a secured personal loan?

A secured loan uses an asset as collateral for the funds. This means that if you don't make your repayments, the lender can repossess and sell the asset to get their money back.

Offering security has several advantages, namely a lower interest rate and higher borrowing amount, as the risk for the lender is reduced compared to an unsecured personal loan.

With a secured loan, the value of your asset determines how much you'll be able to borrow. You can use a secured loan for a wide range of things from cars, to weddings, to home renovations.

What assets can be used to secure a personal loan?

New/used car

Using your car as collateral on a personal loan is one of the most common forms of loan security.

Home equity

If you're a homeowner with a mortgage, you can draw against any equity you have in the property to use as a personal loan.

Expensive items

These include high-cost jewellery, fine art, precious metals, prestige cars and antiques.

Term deposits

You can sometimes borrow near the amount of money in a term deposit if you use it as security a loan.

Pros and cons of a secured personal loan vs an unsecured personal loan

Pros

Lower interest rate: Because these loans are less risky for lenders, you'll usually be offered a lower interest rate than you would with an unsecured loan.
Better chance of approval: Even if you're ineligible for an unsecured loan, you may still be eligible for a secured loan - again, because they are less risky for the lender. This could be beneficial for part-time or casual employees and bad credit borrowers.
Higher borrowing amounts: Depending on the value of your asset, you may be able to borrow up to $100,000.
More flexible: With the exception of car loans, you can use a secured personal loan for a variety of reasons.

Cons

Risk to your asset: Your asset acts as the guarantee for the loan. If for some reason you are unable to make your repayments, the lender can repossess and sell your asset to get their money back.
Borrowing amount limitations: The value of your asset determines how much you'll be able to borrow. So if you need a larger amount than what your asset is worth, you may find the loan not fit for purpose.

Our expert says

"Secured loans aren't just for borrowers who are ineligible for an unsecured loan. Even though you put an asset at risk, if you know you'll be able to make your repayments, you may opt for a secured loan for a lower interest rate."

Alanna Glenn

Money Expert

How to compare secured personal loans

Interest rates: The interest rate is what the lender charges you for borrowing money. This is presented as a yearly percentage. The lower the interest rate, the lower the cost of the loan. By comparing lenders, you can work out if the rate is competitive.

Fees: Upfront or ongoing fees will add to the cost of your loan. As a guide of the true cost of the loan you can look at the comparison rate which includes both interest and fees. It's presented as a percentage and displayed next to the interest rate.

Should I choose a fixed rate or a variable rate?

Whether variable rates are higher or lower, they can change at any time at the lender's discretion. Fixed rate secured loans might be lower than variable rate loans at the moment, but that isn't always the case. Choosing between a fixed or variable loan is often about your own preference than anything else.

The average interest rate for a fixed secured personal loan in March 2025 is 8.36%.

The average interest rate for a variable secured personal loan in March 2025 is 10.53%.

Loan term: This is how long you have to repay the loan. Secured loans offer terms from 1 to 7 years. Longer terms mean lower monthly repayments, but also mean that you'll end up paying more in interest charges.

Asset requirements: Before you can be approved for a secured loan, the lender will need to accept your asset. You'll be able to compare requirements before you apply. These criteria typically include the age and value of your asset.

Repayment flexibility: You can usually choose between weekly, fortnightly or monthly. You may also want the ability to make extra repayments without penalty, so you can save on interest costs and pay off the loan earlier. Variable rate loans typically offer more flexibility when it comes to early repayment.

Eligibility: Lenders will take into account your personal circumstances, including your income, credit score, assets and liabilities, when you apply.

Don't know your credit score? You can check your score and get a free copy of your credit report on Finder

Check your credit score for free with Finder

How can I apply for a secured personal loan?

Step 1: Work out how much you need to borrow and what you can afford. You can use a personal loan calculator to help you.
Step 2: Compare lenders and loan products. Don't forget to compare interest rates, fees, early repayment terms and eligibility criteria.
Step 3: Organise and prepare the required documentation. This will make the application process quicker. Each lender will have its own criteria and requirements, but you'll likely need to have the following documents handy:

100 points of ID proving your name and that you're over 18 years old.
Proof you can pay off the loan. You may have to submit bank statements and payslips.
Details of your address and supporting bills or documents.
Proof of ownership of a valuable asset/property.

Step 4: Apply. Most lenders have their applications available online and the application should only take about 10-15 minutes.

Frequently asked questions about secured personal loans

Why compare personal loans with Finder?

Addicted to details. We know taking out a personal loan is something you'll be hooked up with for a while. That's why we put hours into research for this guide (and still do at least once a month)

Rates obsessed. Lenders come in all shapes and sizes, that's why we don't just track the big banks, but all the digi folk too. Pretty much everyone but your parents to be honest.

Cash for whatever you need. Lending rates verified from 180+ products day and night. Whether you're buying a car, rennovating your home or heck just ready to let loose with the spending - we got you.

Finder Score for personal loans

To make comparing even easier we came up with the Finder Score. Interest rates, fees and features across 300+ personal loan products and 120+ lenders are all weighted and scaled to produce a score out of 10. The higher the score the better the loan - simple.

For a fair comparison, unsecured loans and secured loans are scored separately. Assumptions are made on the interest rates charged for both excellent credit and average credit customers in each segment.

Read the full Finder Score methodology

Thank you for your feedback!

To make sure you get accurate and helpful information, this guide has been edited by Joelle Grubb as part of our fact-checking process.

Written by

Rebecca Pike

Senior Money Writer

Rebecca Pike is Finder’s senior money writer, with over 10 years of experience in mortgages and personal finance. A frequent TV and radio commentator, she frequently appears on Sunrise, A Current Affair, 9News, and Sky News, and contributes expert analysis to publications like Yahoo Finance and The Latch. Rebecca previously served as Editor of Mortgage Professional Australia. She has a Master’s degree in Journalism as well as ASIC-recognised certifications in Tier 1 Generic Knowledge and Tier 2 General Advice Deposit Products, which comply with ASIC guidelines. See full bio

Rebecca's expertise

Rebecca has written 218 Finder guides across topics including:

Home loans
Cost of living
Budgeting

More resources on Finder

Pepper Money Great Southern Bank Fixed Rate Personal Loan

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Secured Personal Loans

By securing your loan with an asset, you could be eligible for lower interest rates and higher borrowing amounts.