What is a secured car loan?

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.

Compare car loans with Savvy and make an informed decision

LenderProduct NameAdvertised RateComparison RateMonthly Repayment
SavvyNew Car Loan2.85%
Bank of AustraliaUsed Car Loan6.45%
ANZOnline Secured Car Loan7.85%
CUAFixed Rate Car Loan7.99%
BankSASecured Fixed Personal Loan8.49%
St GeorgeSecured Fixed Personal Loan8.49%
CBASecured Car Loan8.49%
NABVariable Rate Personal Loan14.19%

* 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.

Competitive rates
We work to get the most competitive rates from our top panel of lenders so you get better secured car loan rates
Dedicated consultants
A dedicated loan consultant helps you through the process from inquiry, application, and through settlement.
Flexible terms
Loans done your way. Experience the difference with flexible, easy to understand loan terms from 1 - 7 years.