Secured & Unsecured Loans

Online Personal Loans Australia offers both Secured loans & Unsecured loans, so let’s dive in and learn the benefits of each before you commit. 

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Secured & Unsecured Loans

Online Personal Loans Australia offers both Secured loans & Unsecured loans, so let’s dive in and learn the benefits of each before you commit. 

When applying for a loan, there are many variables to consider. One of these is whether the loan is secured or unsecured. Credit cards are an unsecured form of finance, while mortgages and car loans are always secured. On the flip side to this, personal loans can be either secured or unsecured depending on what you’re after.

Secured Loans

Put simply, secured loans use a personal asset as collateral to protect the lender if you fail to honour the finance agreement. For example, if you apply for a car loan, then your car acts as the security. If you continually fail to make repayments then not only will your credit score dip, but also your asset, in this case, your car, can legally be seized by the lender.


However, so long as your honour the agreement, secured loans come with a whole host of benefits including lower interest rates, greater loan amounts and better terms.

What Are Unsecured loans?

An unsecured loan has no ties to any of your personal assets meaning there is less risk if you fail to make repayments.


However, because of this, unsecured loans generally come with higher interest rates and lower loan amounts. It can also be hard to gain approval for an unsecured loan since there is more risk on the lender, and therefore it’s important to ensure that you have a good credit score before applying for an unsecured loan.

Types of Secured Loans

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Since the purpose of this form of finance is entirely to help you to pay off your home slowly, it makes sense that your house will be used as security.

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Car Loan

Like a mortgage, the car that you are borrowing money for is most commonly used as collateral when you apply for a car loan.

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Personal Loan

If you take out a secured personal loan then you can expect to benefit from an improved chance of approval, better interest rates and greater loan amounts.

Types of Unsecured Loans

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Credit Cards

Credit cards are a great way to build up your credit rating and come with fantastic perks including insurance, cash back and air miles. However, you can expect high interest rates and difficulty gaining approval.

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Student Loan

Being a student, it’s unlikely that you will have too many assets to your name. There is also more leniency when it comes to repaying a student loan. If you fail to honour your agreement you can expect to face lawsuits & a damaged credit rating.

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Personal Loan

No, this isn’t a typo, personal loans can in fact be both secured or unsecured! If you don’t have any worthy assets or feel uncomfortable using an asset as security against your loan then you can get an unsecured personal loan.

Benefits of Secured Loans vs Unsecured Loans

1. Lower interest rates:

    • Since secured loans come with minimal risk to a lender, in turn, you can benefit from lower interest rates, meaning that secured loans are far more affordable than unsecured loans.

2. Greater loan amount:

    • With a house or car supporting your loan application, you can expect to be able to borrow greater amounts of money. The more your asset is worth, the more you’ll likely be able to borrow.

3. Better chance of loan approval:

    • Less risk for the lender means a greater chance for you to receive the green tick. Providing that your credit rating isn’t too low, you can expect to receive approval on a secured loan.