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
|Lender||Product Name||Advertised Rate||Comparison Rate||Monthly Repayment|
|Savvy||New Car Loan||2.85%|
|Bank of Australia||Used Car Loan||6.45%|
|ANZ||Online Secured Car Loan||7.85%|
|CUA||Fixed Rate Car Loan||7.99%|
|BankSA||Secured Fixed Personal Loan||8.49%|
|St George||Secured Fixed Personal Loan||8.49%|
|CBA||Secured Car Loan||8.49%|
|NAB||Variable Rate Personal Loan||14.19%|