Secured Personal Loans

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

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By

Rebecca Pike

Edited by

Joelle Grubb

Updated

Fact checked
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1 - 3 of 3
Updated regularly
Name Finder Score Interest Rate (p.a.) Comp. Rate (p.a.) Application Fee Monthly Fee Monthly Repayment
OurMoneyMarket Secured Personal Loan ($5,000-$75,000)
OurMoneyMarket logo
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 siteMore Info
Latitude Variable Rate Personal Loan
Latitude Financial Services logo
Variable2 - 7 Years $5,000 - $70,000
Finder score
6.9 Standard
Interest Rate (p.a.)
9.49%
to 29.99%
Comp. Rate (p.a.)
10.37%
to 30.69%
Application Fee
$0
Monthly Fee
$13
Monthly Repayment
$653.57
Go to siteMore Info
Special Finder offer: $395 establishment fee waived for approved personal loan applications submitted through Finder. Latitude may withdraw offer at any time. T&Cs apply.
CommBank Secured Personal Loan
CommBank logo
Fixed1 - 7 Years $4,000 - $120,000
Finder score
7 Great
Interest Rate (p.a.)
6.49%
to 10.49%
Comp. Rate (p.a.)
7.90%
to 11.86%
Application Fee
$250
Monthly Fee
$15
Monthly Repayment
$635.55
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Key takeaways

  • 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 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 loan?

The most common collateral for a secured loan is a vehicle (new or used) and these loans are typically called car loans. Other options include the equity in your home, expensive items like fine art and high-cost jewellery or term deposits.

Pros and Cons of a Secured Loan vs an Unsecured 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.
Alanna Glenn's headshot
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."

Publisher

How to compare secured personal loans

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

In addition to interest, you should also account for fees. This will add to the cost of your loan and can come in the form of establishment or application fees and monthly fees.

The comparison rate includes interest and fees, and is the true cost of the loan. 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 November 2024 is 8.7%.

The average interest rate for a variable secured personal loan in November 2024 is 11.61%.

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: Check that the repayment schedule fits your lifestyle. This can be 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. Tip: 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 loan?

  1. Work out how much you need to borrow and what you can afford. You can use a personal loan calculator to help you.
  2. Compare lenders and loan products. Don't forget to compare interest rates, fees, early repayment terms and eligibility criteria.
  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.
  4. Apply. Most lenders have their applications available online and the application should only take about 10-15 minutes.

Why compare personal loans with Finder?

freeAddicted 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)
expert adviceRates 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.
independentCash 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

Frequently asked questions about secured personal loans

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

Senior writer

Rebecca Pike is Finder's senior writer for money. She joined Finder after almost four years writing for business publications in the mortgage and finance industry, including three years as editor of Mortgage Professional Australia. She regularly appears as a money expert on programs like Sunrise and Today, as well as across radio and newspapers. She also holds ASIC-recognised certifications in Tier 1 Generic Knowledge and Tier 2 General Advice Deposit Products. See full bio

Rebecca's expertise
Rebecca has written 201 Finder guides across topics including:
  • Home loans
  • Cost of living
  • Budgeting
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