Secured personal loans from 4.04%

You may need a personal loan for several reasons. Whether it’s home renovations or an expensive visit to the dentist, taking out a personal loan can come in handy when you need a quick boost. You will generally have two options when it comes to personal loans: secured or unsecured.

Let’s discuss what is a secured personal loan, pros and cons, costs, etc.

What is a secured personal loan?

A personal loan is, in essence, a loan for personal purposes. While a car loan should be used to buy a car, a personal loan can be used for everything from paying for vacations abroad to renovating a home.

A secured personal loan requires you to use an asset, such as your car or a term deposit, as collateral on the loan. This acts as a security blanket for the lender. So in the event that you can’t repay your loan, it has your assets to fall back on to make up for the losses. Typically, you’ll need to take out a secured personal loan if you’re looking to borrow a large sum of money, as lenders like to have that collateral for them.

Secured personal loans can also come with lower interest rates than unsecured loans due to the added security. With this in mind, the lender may have more confidence that you will repay your loan and, if not, that it will not be disbursed.

Advantages and disadvantages of secured personal loans

There are a number of pros and cons to consider when evaluating whether to take out a secured personal loan.


  • Often lower interest rates: Secured personal loans often have lower interest rates than unsecured loans because there is less risk of loss for the lender
  • You can borrow more: You can usually borrow more with a secured personal loan
  • Fewer costs: You may also find that secured personal loans have fewer or no fees compared to unsecured personal loans.

The inconvenients

  • Your asset is at stake: The biggest obvious downside to secured personal loans is that you could lose your assets if you can’t meet your repayments.
  • Asset Requirements: Depending on what you want to use as collateral, there may be certain requirements from your lender. For example, if you are using a car as collateral, it may need to be relatively new or worth a certain amount of money.
  • Less flexibility: Secured personal loans are usually quite strict about the use of funds. For example, if you took out a loan for home renovations, but they ended up costing you less than expected, you can’t use the rest to buy yourself a vacation.

Secured vs Unsecured Personal Loans

Before deciding if a secured personal loan is right for you, it can be helpful to compare the pair: secured and unsecured personal loans. Since these will be your two main options, it may be helpful to know the differences and what may be most useful for your situation.

Secured Personal Loans Unsecured Personal Loans
  • Online security: You must offer a property as collateral
  • Lower interest rates: Interest rates will often be lower
  • Higher loan amounts: You can usually borrow more with a secured personal loan
  • Longer repayment terms: You will probably benefit from a longer period of time to repay your loan
  • Strict: You will need to provide a qualifying asset and spend the borrowed money only on what you borrowed it for
  • No assets required: You do not need to have any assets as collateral
  • Higher interest rates: Since you have no collateral on the loan, your interest rate will likely be higher
  • Lower loan amounts: You may be limited in the amount you can borrow
  • Shorter repayment terms: You will likely have a shorter repayment window than with a secured personal loan
  • Soft: You can usually spend the money more freely

From this brief comparison, you may find that secured personal loans are best suited for large, one-time purchases, such as installing a back patio or the costs of cosmetic surgery. By knowing exactly how much goods or services cost, you won’t be left with too much or too little left over.

While an unsecured personal loan may be better for a smaller project, like a quick kitchen makeover or a vacation abroad. That way, if there’s any money left after you’ve funded your personal business, you can just spend it on whatever you want.

Secured Personal Loan Rate: Fixed vs Variable

To learn more about secured personal loans and their “lower” rates, you will generally have two interest rate options: a fixed rate or a variable rate.

Fixed rates are usually a bit higher than variable rates, but once you have your rate it will stay the same for the duration of your loan. This means you know exactly how much your repayments will be each month and how much interest you’ll pay back overall. This can be useful for budgeting and planning purposes.

On the other hand, variable rates will usually be slightly lower than the fixed rates available. However, variable rates may change throughout the term of your loan depending on cash rate/market activity. So while it might end up being lower than a fixed rate initially, if interest rates go up, you might end up paying more. But if interest rates go down, you’ll pay even less than the rate you started with. It can be a little less predictable than a fixed rate personal loan because you don’t know exactly how much you’ll pay back in interest.