Secured Personal Loan

Secured Personal Loan

Is a secured personal loan the right loan for your situation?

A secured personal loan is any personal loan that is taken out against the value of some specific item of value, meaning that any failure to repay the personal loan lenders can result in the repossession and sale of the item to cover the outstanding balance of the secured personal loan.

There are various different types of secured loan products in the market today, however the most common by far is a commonly referred to as car loans. You can use a secured personal loan calculator to work out the repayments, and know just how much interest you will be paying back.

Personal loan products that are secured generally come with a lower interest rate than with an unsecured personal loan and they are generally much easier to obtain an approval for. This is because of the added security, which protects the personal loan lenders from any inability on the borrower to repay the personal loan. The secured item must be able to be registered, and the personal loan lender will use the vin or chassis, engine and registration numbers to register their interest over the car for example.

Are you after personal loans with the lowest interest rate? Then secured personal loans are the answer. Compare the different secured personal loan lenders to find the best loan possible taking into account your personal situation, then work out the repayment amount for each and the interest component with a personal loan repayment calculator.

Examples of secured personal loan lenders include:

  • Payday or Cash Advance Lenders and Pawn Brokers
  • Finance Companies
  • Credit Unions and Building Societies
  • Banks

Payday or cash advance personal loan lenders and pawn brokers primarily look after people requiring a fast personal loan, typically in the range of $1500 dollars. The interest rates are generally the highest of all the secured personal loan lenders Australia has. Some of these are not regulated by the UCCC (Uniform Consumer Credit Code) so make sure you understand the consequences of not repaying the loan on time, as there are often large late fees involved.

Finance companies have taken a large piece of the secured personal loan market away from the banks and credit unions, especially with regards to car loans because they will lend money to people with some past credit issues. Often in addition to the security taken, they will ask for some deposit, to ensure the security to loan ratio meets their lending criteria.

Credit unions and building societies are one of the most popular secured personal loan lenders in Australia, and you don’t have to be a member to obtain a secured personal loan from them. There are many credit union branches scattered through out Australia, so they are also quite convenient.

Banks are the traditional secured personal loan lenders in Australia, and if you regularly have your salary go into a savings account with a bank, this could be a good place to apply for a personal secured loan.

It is important that you understand the lending criteria for loans that personal loan lenders use to decide whether to approve your secured personal loan application or not. Although each lenders policy will be different; all lenders use the 6 C of credit assessment as the basis for making the decision.

In summery, the advantages of a secured personal loan over the unsecured personal loan option are:

  • Low interest rate personal loans
  • Larger amounts lent (up to $80,000 for most personal loan lenders)
  • Lower fees – the application and account keeping fees are lower
  • Easier to apply for, borrowers with credit history issues are looked at

When using a loan repayment calculator, calculate the savings in interest you will have by shortening the loan term from 7 years to say 3 or 4 years, and before deciding to apply for secured personal loans discuss your options with a financial professional first.

It is also worth remembering that if you are looking at new or used cars Australia wide, it is a legal requirement that you have comprehensive car insurance on it while financed, and the financier will be registered as an ‘interested party’. So factor the cost of car insurance into your budget and compare car insurance quotes from different insurance companies Australia has in the market.



  1. Money Monthly says:

    It is very important before applying for a personal loan that you know the lending criteria the lender has.