Secured & Unsecured Personal Loans

Information verified correct on September 23rd, 2016

Whether it be a secured personal loan or an unsecured personal loan, you can make sure that your financial needs are provided for right when you need it.

A personal loan is a loan that is usually borrowed from a bank or any other financial institution for meeting personal needs, such as buying a new car, refurbishing a house, or paying for holiday.

Compared to other types of loans like a mortgage, personal loans are normally of a shorter term. The repayment period for personal loans normally ranges between one to five years, rather than for 10, 20 or 30 years like in a mortgage. You will be required to make monthly payments to the bank or financial institution to pay back the amount borrowed plus interest. With a personal loan, you will sharpen your financial arsenals so that you can make investments of your choice without having to save the money first.

Secured & Unsecured Personal Loan Comparison

Rates last updated September 23rd, 2016
$
Interest Rate (p.a.) Comparison Rate (p.a.) Min Loan Amount Loan Term Application Fee Monthly Repayment
Latitude Personal Loans (Unsecured)
An unsecured loan designed for multiple purposes – renovating, buying a car or travelling. Funds can be in your count in as little as 24 hours.
From 13.99% (fixed) 15.2% $3,000 2 to 7 years $250 (Loans under $4000 - $140) Go to site More
HSBC Personal Loan
A competitive fixed interest rate loan with the option to make extra repayments. Min. income $30,000
From 11.99% (fixed) 12.54% $5,000 1 to 5 years $150 Go to site More
CUA Fixed Rate Personal Loan
A competitive fixed-rate loan with flexible repayments that can help you consolidate debt or make a large purchase.
From 11.99% (fixed) 12.83% $1,000 1 to 7 years $120 Go to site More
ANZ Fixed Rate Personal Loan
A flexible loan option that lets you pay off your debt, buy a car, fix up your house or cover travel costs.
From 13.95% (fixed) 14.81% $5,000 1 to 7 years $0 Go to site More
ANZ Variable Rate Personal Loan
A variable rate loan that lets you make and redraw additional repayments.
From 14.69% (variable) 15.55% $5,000 1 to 7 years $0 Go to site More
Bank of Melbourne Unsecured Personal Loan
An unsecured personal loan that gives you a choice between a fixed or variable rate.
From 14.74% (variable) 15.61% $3,000 1 to 7 years $195 Go to site More
BankSA Unsecured Personal Loan
BankSA allows you to borrow up to $40,000 with your choice of a fixed or variable rate.
From 14.74% (variable) 15.61% $3,000 1 to 7 years $195 Go to site More

* The personal loan offers compared on this page are chosen from a range of personal loans finder.com.au has access to track details from and is not representative of all the products available in the market. Products are displayed in no particular order or ranking. The use of terms ‘Best’ and ‘Top’ are not product ratings and are subject to our disclaimer. You should consider seeking independent financial advice and consider your own personal financial circumstances when comparing personal loans.

Rates last updated September 23rd, 2016
$
Interest Rate (p.a.) Comparison Rate (p.a.) Min Loan Amount Loan Term Application Fee Monthly Repayment
IMB New Car Loan
This fixed rate new car loans up to 2 years old features no early repayment penalties
From 6.34% (fixed) 6.62% $2,000 1 to 7 years $199 Go to site More
CUA Fixed Rate Car Loan
A competitive car loan that offers flexible repayment options and no account keeping fees.
From 7.99% (fixed) 8.29% $15,000 1 to 7 years $120 Go to site More
RACV Car Loans
Enjoy this fixed rate new car loan offer from RACV. No ongoing fees.
From 6.2% (fixed) 6.73% $15,000 1 to 7 years $378 Go to site More
Bank of Melbourne Secured Car Loan
A low rate personal loan from Bank of Melbourne with variable or fixed option.
From 8.49% (fixed) 9.39% $3,000 1 to 5 years $195 Go to site More
BankSA Fixed Rate Car Loan
Apply for a fixed rate car loan from multi-award winning BankSA.
From 8.49% (fixed) 9.39% $3,000 1 to 5 years $195 Go to site More
Westpac Car Loan
Apply for a Westpac car loan and enjoy a great interest rate when you purchase a new or used vehicle.
From 8.49% (fixed) 9.54% $10,000 1 to 7 years $250 Go to site More

* The personal loan offers compared on this page are chosen from a range of personal loans finder.com.au has access to track details from and is not representative of all the products available in the market. Products are displayed in no particular order or ranking. The use of terms ‘Best’ and ‘Top’ are not product ratings and are subject to our disclaimer. You should consider seeking independent financial advice and consider your own personal financial circumstances when comparing personal loans.

About personal loans


What’s the difference between secured and unsecured personal loans?

personal loan coins

If you want to apply for a personal loan, it’s essential that you familiarise yourself with the various types of loans, particularly the distinction between secured and unsecured loans. Knowing the differences will assist you in choosing the type of loan that adequately meets your needs.

If you borrow a secured loan, you will need to offer an asset of value to the bank or financial institution that will act as the collateral until you complete the repayment for your loan. Some of the things you can use as collateral include property deeds, a vehicle, or a house. With a secured loan, the lender can sell your collateral to recover their money if you are unable to pay back the loan according the agreement. If the sale is not enough to complete the repayment for the loan, you will lose your valuable asset, and you will still need to look for other ways of paying the difference.

An unsecured loan, on the other hand, does not oblige you to put anything as security in case you default on repayment. A good example of an unsecured loan is the money lent on purchases made by a credit card. You will sign a contract with your lending institution on the terms and conditions of the unsecured funds. You will be given an unsecured loan if you have a good credit rating as seen in your spending and repayment history. Paying your bills on time and in full is an important factor for sailing your credit rating upwards. The lender will determine whether to give you the loan or not based on your credit reports and your income. Since the lending institution does not have any assurance of getting the borrowed money back, it takes the risk each time a transaction takes place.

Since secured loans are asset-backed, you will be able to get approval for a higher loan limit when applying for one. For unsecured loans, the lender will limit the amount you can borrow. Since there is no security, unsecured loans usually come with a much higher interest rate than secured loans.


What are the pros and cons of secured loans?

Pros

  • With a secured loan, you do not need to have a perfect credit rating. Since a security is needed, a lending institution may be ready to accept riskier borrowers. Nonetheless, you still need a good credit rating when applying for a secured loan to increase your chances of getting approved.
  • You will be given long repayment periods lasting for five years or longer. This gives you enough time to plan on how to pay back your loan. On the flip-side though, you may be required to pay higher interest rates if you delay too much in paying off your debt.
  • It is normally cheaper to process a secured loan than unsecured loan. Since you give collateral to act as a security for your loan, the lending institution will give you a low interest rate than someone who does not give any guarantee.
  • You will be approved for a secured loan much faster and with greater ease. The lender will find it less complicated to check your financial history when applying for a secured loan because of the added benefit of the collateral.
  • With a secured loan, you can access a much larger loan amount than for an unsecured loan.

Cons

  • Since you are using your property to safeguard the loan, you risk losing your valuable possession in case you default on your repayments. If you cannot meet your repayment obligations, then you are better off without this type of personal loan.
  • With a secured loan, you will get into another debt, and this may not be what you want if your pocket is already poked with other debts. If you get into a financial crisis, you may find it difficult to pay the loan back.
  • Most companies offer secured loans with variable rates and unsecured loans with fixed rates. Variable rates are clearly more risky as you cannot effectively plan your repayment schedules because you cannot predict the rates in a few years’ time.

What are the pros and cons of unsecured loans?

Pros

  • With unsecured loans, you will not risk any of your assets. The lending institution does not have the right of repossessing your property in case you default on repayments since there is no asset placed as security. In most cases, unsecured loans are guaranteed by the promise to pay back the loan and the contract signed between the borrower and the lender.
  • Unsecured loans can be used for an extensive range of personal uses – be it purchasing a new car, taking a vacation, or for debt consolidation. For a secured loan, financial institutions are usually more stringent on the purpose of the borrowed cash.
  • Currently, there are a wide range of unsecured loans tailored to suit nearly every financial circumstance. Even if you have a poor credit rating, there are specialists that deal with bad credit loans, such as guarantor loans, which you can apply for.
  • If you have a good credit rating, the application of an unsecured loan is less complicated. Further, the application process is much simpler because there is no collateral to evaluate and the loans are normally in small amounts.

Cons

  • Since unsecured loans are guaranteed by trust, they offer more risk to the lending institution, which normally charge high interest rates. If you have a bad credit history, you will be levied with much higher interest rates than someone with a reputable credit record.
  • With unsecured loans, your borrowing limit will be restricted. For instance, you may be limited to borrowing up to $10,000 based on the risk assessment done by your bank or financial institution.
  • Unsecured loans offer short repayment periods, usually less than five years. Secured loans, however, comes with 10 to 15 years repayment period.

How to choose the most suitable personal loan

Getting a personal loan is a great way of financing the purchase for a car, vacation, or meeting urgent medical expenses. Finding the right one, however, can be similar to climbing a mountain if you don’t have appropriate skills to navigate the myriad of available options.

Here are some important tips on how to choose the most suitable personal loan for your needs.

  • The reason for the loan. The purpose of the loan you wish to apply for is essential in establishing the type of loan to choose. For instance, if you need some cash for buying a new car, you may opt for a secured personal loan. If you need some quick cash to sort out a mess during an emergency, you may go for an unsecured personal loan.
  • Check your credit history. You need a good credit rating to access the optimum loans with lower rates. If your credit history is questionable, you may be limited in terms of the number of loans you can choose from.
  • Consider fees and features. Run through the loan application documents with your second pair of eyes to ascertain that the fees and features are those that you want. If anything is unclear, ask questions until the answers are satisfactorily addressed.
  • Compare loans. When shopping for personal loans, you need to compare them before making your final decision. Instead of looking for interest rates alone, consider how long the repayment will take, and if you can afford the monthly repayments. You can use a personal loan calculator to compare personal loans and get the ones most suitable for your needs.
  • Evaluate your financial situation. Your financial situation will definitely speak volumes of the type of personal loan you need to go for. It’s pivotal that you choose a loan with repayment schedules within your financial brackets.
  • Find a broker. Looking for the most competitive personal loan can at times be both tiresome and confusing. If you want to avoid the hassle and save time, you can enlist the services of a certified broker to do all the legwork for you.

Personal loans can be a great way to meet your financial obligations. You will determine whether you are going for secured or unsecured loan based on your needs and preferences. Whichever one you choose, you should aim to pay it off as early as possible to maintain a good credit rating.



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2 Responses to Secured & Unsecured Personal Loans

  1. Default Gravatar
    Karen | September 6, 2013

    Hi there, I need some advice before I apply for personal loan, just started building my credit last year dec I took car finance and never missed or late payments, two mobile contract never late or missed payment then 7 months ago took cash loan of 2000 and end up paying nearly 3000 and its paid off no missed and late payment.. Is this enough if I apply for unsecured loan? I earn 60k a year and been in a job for more than a year, and been living in the same place for 4 year., I’ve got 1dependant. Thank

    • Staff
      Jacob | September 6, 2013

      Hi Karen.

      If you have a had a solid repayment history with your other loans, no defaults on your credit file and you are in steady employment, you should be eligible to apply for a personal loan. You can compare personal loans on this page. Please have a look at the application requirements for further information.

      Jacob.

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Rates last updated September 23rd, 2016
Purchase rate (p.a.) Balance transfer rate (p.a.) Annual fee
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* The credit card offers compared on this page are chosen from a range of credit cards CreditCardFinder.com.au has access to track details from and is not representative of all the products available in the market. Products are displayed in no particular order or ranking. The use of terms 'Best' and 'Top' are not product ratings and are subject to our disclaimer. You should consider seeking independent financial advice and consider your own personal financial circumstances when comparing cards.

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