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This helpful guide will demystify the difference between secured and unsecured personal loans.
If you’ve been doing your research before applying for a personal loan, you may have seen secured and unsecured loan options. Knowing the difference between secured and unsecured personal loans can help you determine which option is best for you.
A secured loan is one that has an asset of value offered as security against the loan, such as a car, caravan, motorbike or boat. If you’re unable to repay the loan, the lender has the right to sell the asset to help recover the unpaid loan amount.
There are some real benefits to using a secured personal loan! By providing an asset, you’re reducing the lender's risk and you will usually be rewarded with a lower rate, larger loan amount and longer loan term, which can make your regular fortnightly or monthly repayments more manageable.
An unsecured loan doesn’t require you to provide any assets for security. This is a great option if you don’t own a car or other suitable asset.
These loans can come with slightly higher interest rates due to the higher risk for the lender, however because you don’t need to provide asset information, they’re usually faster to apply for and assess, so you could have the money faster.
| Loan details | Secured loans | Unsecured loans |
|---|---|---|
| Interest rates | From 6.99% p.a | From 7.99% p.a. |
| Comparison rates | From 7.06% p.a.* | From 8.06% p.a.* |
| Asset security | Required | None |
To be eligible for any loanless personal loan, you need to meet our criteria:
It’s helpful to have these items close by for your application: