• Car Finance

      Compare and save with Savvy. Savvy has access to all major banks and lenders in the country. This choice gives us the ability to source you the best rates and finance packages around.

      Our application process is quick, easy and our service is second to none.

    • Leisure Finance

      Compare and save with Savvy. Savvy has access to all major banks and lenders in the country. This choice gives us the ability to source you the best rates and finance packages around.

      Our application process is quick, easy and our service is second to none.

    • Home Loans

      Compare and save with Savvy. Savvy has access to all major banks and lenders in the country. This choice gives us the ability to source you the best rates and finance packages around.

      Our application process is quick, easy and our service is second to none.

    • Personal Loans

      Compare and save with Savvy. Savvy has access to all major banks and lenders in the country. This choice gives us the ability to source you the best rates and finance packages around.

      Our application process is quick, easy and our service is second to none.

    • Credit Cards

      Compare and save with Savvy. Savvy has access to all major banks and lenders in the country. This choice gives us the ability to source you the best rates and finance packages around.

      Our application process is quick, easy and our service is second to none.

Secured car loans

Find out how much you could save with in our guide to secured car loans.

Secured car loans

A secured car loan is a type of vehicle finance in which your purchased car is used as collateral, or in finance terms as a “security”, against the loan. This reduces the risk on the lender’s part and in turn, you are offered lower interest rates compared with unsecured loans. Beware: if a borrower defaults (fails to pay back) a loan, the lender may repossess your vehicle to recoup their costs.

The advantages of secured car loans

Secured car loans have many advantages over unsecured loans such as personal loans. The first advantage is a more competitive interest rate. Secured car loans will usually (though not in all circumstances) have lower interest and/or comparison rates than similar unsecured loans. This is because the lender is taking on less risk by using your purchased vehicle as security.

You may be able to choose between fixed and variable rate loans. Variable rate loans are loans where the interest rate can go up or down depending on the market. Fixed rate loans are set at a certain percentage throughout the lifetime of the loan. Variable loans are more flexible in terms of making extra repayments, as you are generally not charged fees for paying out the loan early. Fixed rates are easier to budget for, as repayments are the same every week, fortnight, or month.

Some lenders may allow you to buy certified used or used vehicles with a secured car loan. In some instances, cars up to 12 years old can be financed using secured car loans.

Buyer beware: do your calculations first

As with any credit product or financial decision, you need to determine if you can afford the repayments and other expenses associated with buying a car on finance. This includes registration, fuel, comprehensive car insurance (which many lenders will insist upon if your car is the security), and maintenance.

Unlike unsecured personal loans, your lender will only give you enough money to cover the cost of purchase; other expenses will need to come out of your pocket.

If a borrower defaults on their loan, the bank or lender is legally authorised – in most circumstances – to repossess the vehicle in order to cover their losses.

Pitfalls to avoid when taking out a secured car loan

One common pitfall you can avoid is not budgeting to include other expenses associated with a car purchase. These are ongoing costs such as fuel, insurance, registration, and maintenance.

Another mistake you can avoid is not choosing a loan that is flexible to changing circumstances. If you are starting your career and know your income will increase over time, choosing a seven-year loan with limited early payment options may cause you to pay more in interest. Likewise, you may want a balloon payment that reduces your monthly or regular repayment. However, this sets aside a portion of the loan (20-50%) for immediate payment at the end of the term. There are different options to pay the balloon: paying the lump sum, extending the loan term to pay off the balloon, or refinancing the balloon payment with an external personal loan. The latter two options will mean paying more in interest, however.

You should also read any terms and conditions or fee schedules from your lender, so you are not caught out by repayments. If your lender can offer you a comparison rate that includes most recurring fees (except for transactional fees, such as requesting a statement) you can use this in your overall calculations.

Compare car loans with Savvy and make an informed decision

LenderProduct NameAdvertised RateComparison RateMonthly Repayment
Savvy New Car Loan 2.85%
fixed
3.93% $537.06
Bank of Australia Used Car Loan 6.45%
variable
6.66% $586.28
ANZ Online Secured Car Loan 7.85%
fixed
8.70% $606.14
CUA Fixed Rate Car Loan 7.99%
fixed
8.29% $608.15
BankSA Secured Fixed Personal Loan 8.49%
fixed
9.39% $615.35
St George Secured Fixed Personal Loan 8.49%
fixed
9.39% $615.35
CBA Secured Car Loan 8.49%
fixed
9.54% $615.35
NAB Variable Rate Personal Loan 14.19%
variable
15.06% $701.01

* Commercial loan with the loan amount of $40,000 is looking at a 5 year secured fixed rate of 2.85% p.a. and comparison rate of 3.93% p.a.. WARNING: all fees and charges may not be included on the example above, only the comparison rates, monthly repayment and total cost applies. Therefore, the total cost of the loan might be different. Comparison rate do not include broker fees, redraw fees, early termination fees and fee waivers. Comparison rate may change as a result of the different loan terms, fees and the loan amounts. Establishment fees and monthly fees do not apply to commercial loans, only consumer loans. However, there might be different fees apply.

Why choose Savvy for your secured car loan?

Get the best service, the most competitive rates, and your own personalised loan consultant.

All the facts about secured car loans

Tips, tricks, and truth about secured car loans from the experts at Savvy


The stats on defaults

Though the risk of default can be scary, the real rates of repossession are minimal.

According to the Fitch ‘Dinkum’ Automotive Asset Backed Securities index, loan “delinquency”, or the rate of default is extremely low in Australia. In the June quarter of 2017, the rate for secured car loan defaults was 0.44%. The 60+ days in arrears rate was 0.8%. According to the report, Fitch determined that “losses remain low” over a five-year average. This is in a marketplace for new car finance commitments that totalled $35.7 billion for all of 2017.

Repossession only occurs after a borrower is behind on their payments, has been served with a 30-day default notice which is not paid after another 30 days. A lender can initiate repossession if a borrower has not paid the overdue amount, nor negotiated a resolution, or lodged a postponement of repossession request through a hardship variation.

If a defaulter owes less than $10,000 or 25% of the loan amount, a credit provider cannot repossess their car without a court order or your written consent to enter your property. If a defaulter leaves their car on public property, e.g. parked on the street, a lender may legally tow the car away.

Remember: all consumer car loans are regulated by the National Consumer Credit Protection Act 2009. This means an accredited lender must ensure a prospective borrower has the capacity to pay off a loan without experiencing financial hardship before approving an application.

Secured car loans and business

If you are a business owner or are intending to use your car for business use over 50% of the time, you can take advantage of what’s known as a chattel mortgage or hire purchase. Both are functionally similar: you take possession of a vehicle while paying off a type of secured loan. The difference between them is where ownership lies. In the case of a hire purchase, the lender “owns” the vehicle on paper.

Chattel mortgages allow you to borrow more than the car’s value to fund registration, insurance, and other costs. As a business transaction, you can claim your GST, interest, depreciation, and the fuel input tax credit. You could also take advantage of the Federal Government instant asset write-off, which is valued at $30,000 as of Financial Year 2019-20.

For more information on chattel mortgages, consult a business finance professional.

The pros and cons of a secured car loan

PROS

More competitive interest rates

Since the loan is tied to the value of the car, your lender is prepared to offer more competitive interest rates than comparable unsecured loans.

Fixed or variable rates

Get a choice of fixed rate loans to help you budget or variable rate loans that allow you to pay off your loan earlier without penalty.

Greater car choice

Whether you’re buying new, used, or certified used, lenders consider all types of car purchases from dealers and private sellers.

CONS

Car as security

Since your car is used as collateral, you must be careful to make sure you keep up repayments or risk default.

Your secured car finance and car loan questions answered

Your secured car finance and car loan questions answered
What is a secured car loan?

A secured car loan is a loan that’s directly linked to the value of your purchased car. The car is used as collateral in case of default. The upside is that interest rates are generally lower than unsecured car loans.

What is a security?

A security is a financial term for collateral – an “insurance” against a borrower not paying back the loan. In that case, the lender or bank has a legal means of repossessing a vehicle to recover their losses.

How long do secured car loans last?

Usually loan terms span 5 years. Most lenders offer loan terms ranging from 12 months up to 7 years.

What is a chattel mortgage?

A chattel mortgage is a type of secured car loan for business customers. Businesses can claim tax breaks and depreciation through a chattel mortgage. They can also borrow more than the value of the car.

​Can people with bad credit get a secured car loan?

Yes. Some lenders offer a secured car loan to bad credit customers as the collateral reduces the risk for the lender. Bad credit borrowers may still need to prove adequate creditworthiness and be prepared to pay more in interest.

​Is there a minimum amount I can borrow?

This depends on your needs and what lenders are willing to finance. Some lenders may approve secured car loans for as little as $5,000. You will need to weigh up the interest rate and fees associated with the loan, however.

​What is car loan pre-approval?

Pre-approval or “in principle” approval is a process where a bank or lender gives you a “green light” to spend up to a pre-determined limit when looking for vehicle. This has its advantage as you have a “price ceiling” that others will need to negotiate under in order for you to buy.

Brands you can trust

We are accredited with the most reputable lenders and insurers in Australia giving you a fair choice to compare