What is an unsecured car loan?

An unsecured car loan is a type of consumer car loan where your car is not used as collateral or a security for the loan. Instead, a lender will determine eligibility using a borrower’s credit score or overall creditworthiness. In exchange for taking on more risk, your bank or lender will usually charge a higher interest rate in comparison with a secured car loan. Unsecured loans may also come with a fixed or variable interest rate.

Who may access unsecured car loans?

Unsecured car loans are a type of car loan that does not put up the car as collateral. As such, lenders will look at a borrower’s creditworthiness, or ability to pay back a loan, instead.

Lenders may approve unsecured car loans even to bad credit customers, but their interest rates will be significantly higher than those customers with good or excellent credit.

How can you tell if you have good credit?

In Australia, credit reporting agencies give customers a credit score based on creditworthiness. These range from 0 to 1200, with others using a 0 to 1000 scale.

Lenders reward lower risk borrowers with more competitive interest rates or access to specialised lending products. Higher risk borrowers may gain approval with a higher than usual interest rate.

Calculate your car loan repayments

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.

Trust Savvy With your unsecured car loan

Savvy is here to help you through the unsecured car loan application process.

Secured or unsecured
Savvy helps Australians gain approval for unsecured car loans, our 25-strong lender panel means you get better, competitive rates.
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