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Secured vs Unsecured Personal Loans

This helpful guide will demystify the difference between secured and unsecured personal loans.
If you’ve been doing your research before applying for a personal loan, you may have seen secured and unsecured loan options. Knowing the difference between secured and unsecured personal loans can help you determine which option is best for you.

What is a secured loan?

A secured loan is one that has an asset of value offered as security against the loan, such as a car, caravan, motorbike or boat. If you’re unable to repay the loan, the lender has the right to sell the asset to help recover the unpaid loan amount. 

There are some real benefits to using a secured personal loan though! By providing an asset, you’re reducing the lender's risk and you will usually be rewarded with a lower rate, larger loan amount and longer loan term, which can make your regular fortnightly or monthly repayments more manageable.

What is an unsecured loan?

An unsecured loan doesn’t require you to provide any assets for security, unlike the secured loan. This is a great option if you don’t own a car or other suitable asset.

These loans can come with slightly higher interest rates due to the higher risk for the lender, however because you don’t need to provide asset information, they’re usually faster to apply for and assess, so you could have the money faster.

What can you use a secured or unsecured personal loan for?

With SocietyOne, you can use your secured or unsecured personal loan for almost any purpose.
Many of our customers use their loans for:
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Debt Consolidation
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Buying a new or used car, caravan, motorbike or boat
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Home expenses such as renovations, moving costs or new whitegoods.
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Renewable energy or green improvements such as solar panels or water tanks.
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Weddings
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Holidays
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Education
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Medical expenses

Comparing secured loans and unsecured loans

Picking the right product can be tricky with all products, and there are pros and cons to each. 

A secured personal loan for example can allow you to borrow more money over a longer period of time and with lower rates. However you will need to have an asset available to pledge as security and provide more documentation than an unsecured loan.

On the other hand, an unsecured personal loan might have slightly higher interest rates, but the application process is fast and is a great option if you don’t have any suitable assets to provide as security.

Here’s a snapshot of our loan features

Secured loans
Unsecured loans
Interest rates
From 4.95% p.a
From 5.95% p.a.
Comparison rates
From 4.95% p.a.
From 5.95% p.a.
Amount you can borrow
$5,000 to $70,000
$5,000 to $50,000
Loan terms
2, 3, 5 or 7 years
2, 3, or 5 years
Asset security
Yes, you will need to provide an eligible asset as security
No security required 
Monthly fees
$0
$0
Early repayment fees
$0
$0
Hidden fees
$0
$0
See our Rates and Fees page for more information.

Why are the interest rates different?

The interest rate or comparison rate is often one of the deciding factors when choosing a personal loan.  

Because a secured loan is seen as lower risk by a lender, these loans often come with lower interest rates. However, it is always important to look at the comparison rate as this takes into account any fees and charges and so reflects the true cost of the loan. Some lenders charge upfront balloon payments or other fees which would be included in this amount.  

An unsecured loan on the other hand is a slightly higher risk for the lender, so understandably can come with slightly a higher interest rate to mitigate the risk of the loan not being repaid. 

With either option, you could still find yourself snapping up a great deal by choosing a non-bank lender that offers risk-based pricing, like SocietyOne. This means the better your credit profile, the lower the interest rate they offer you. If you have a good, very good or even excellent credit history, you could get a rate lower than you’d likely get from a big bank.

How our rates compare

See how our unsecured personal loan rates measure up to the big 4, Commonwealth Bank, Westpac, ANZ and NAB.
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Get My Rate
Rates as of 03/05/2021. Excludes short term bank promotions.
View the fine print

Fees and charges

Fees and charges vary between lenders so it is important to make sure you understand any fees or charges associated with applying for or maintaining a secured or unsecured personal loan.

Here are some of the fees you might come across when researching which loan is right for you:

Credit check fee

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We don't charge any credit check fees

Direct debit fees

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We don't charge any direct debit fees

Account keeping fees

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We don't charge account keeping fees either

Early repayment fees

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We don’t charge any ealy repayment fees.

You’re welcome to pay off your loan early with no penalties.

Balloon payment

This is a lump sum paid at the end of a loan term, often applied to car loans.
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The good news is, we don’t charge these.

Origination or establishment fee

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SocietyOne do charge a small establishment fee.

It's simply added to the total loan amount so you don’t have to worry about paying any upfront fees.

Missed or late repayment fees

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SocietyOne charges $15 per missed payment or $35 for late repayments, but if you pay your loan repayments on time you won't be charged these fees.

These are not included in a comparison rate, as it is assumed that you will maintain your repayments. Remember, that defaulting on your repayments can also have a negative impact on your credit score.

Borrowing the right amount

The amount you can borrow differs between lenders. The important thing to consider is how much you need and can afford to pay back.

Ensuring your loan repayments fit into your budget is essential, so we’ve created this handy tool to help calculate what your loan repayments could be.

Calculate your loan repayments

*Please enter an amount between $5,000 and $70,000
* Max loan amount for Unsecured is $50,000
Example Interest rate: {{ rateRanges.interest.low | currency }}% p.a.^ Comparison rate: {{ rateRanges.comparison.low | currency }}% p.a.*

Your estimated repayments

$

Total repayments amount: ${{ loanTotal | currency(0) }}
includes interest and fee.

Who can apply for a secured or unsecured personal loan?

The first thing you should do is check your eligibility with the lender. If you’re looking to apply for a personal loan with SocietyOne, you’ll need to ensure you meet our lending criteria:

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You need to be at least 18 years of age
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You need to be an Australian citizen or a permanent resident of Australia
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You must earn more than $30,000 per annum
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It’s important that you have a good credit history.

If you’re applying for a secured personal loan, you will need to have an asset to pledge as security. At SocietyOne, your asset will need to meet a minimum value, dependent on the amount you wish to borrow. Acceptable assets include:

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Vehicles (passenger and light commercial vehicles
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Motorbikes
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Caravans
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Marine (boats and personal watercraft)

You will need to provide asset details, proof of ownership or purchase invoice, and insurance as part of the verification process.

Handy things to have ready to make the application process a breeze

It’s also helpful to have these items close by to help you get through the application form quickly.

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Drivers licence 
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Know your annual salary before tax
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Know your monthly expenses
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Your online banking login details to upload your bank statements (used as income proof) or a PDF of your last 3 months of bank statements
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If you’re self-employed, you’ll also need your most recent ‘Notice of Assessment’

If you’re applying for a secured personal loan, you’ll also need to provide asset details as part of the verification process.

The documents we require depend on your ownership of the vehicle but it will help to have these things handy:

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Registration certificate
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Proof of insurance
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Invoice or proof of private sale, if you are purchasing a vehicle

Frequently Asked Questions

What are the benefits of secured personal loans?

With a secured loan, you can borrow larger loan amounts compared to an unsecured personal loan and interest rates are also lower, as they are seen as less risky to the lender. 


They’re a great way to get a better deal on a personal loan if you already have an asset to provide as security or are purchasing a car.

Are secured loans easy to apply for?

The approval and application procedure vary with every lender. 


At SocietyOne, all of our personal loans applications are online and you can get a quote in as little as 2 minutes. If you choose the secured personal loan option, you’ll need to provide additional documentation for the asset you’re providing as security but the whole process is very fast and simple.

What is the process of applying for a personal loan?

Applying for a SocietyOne loan is simple.

  • Get your rate: In as little as 2 minutes we'll give you an interest rate and comparison rate based on your credit profile.
  • Apply online: Most people finish their application within 5 minutes (and it's easier to do if you're enjoying your morning coffee).
  • Get paid: Once approved, we'll have the loan funds in your account in as little as 1 business day.‍

Get your rate now and get started.

Can I apply for a personal loan if I am currently unemployed?

To be eligible for any SocietyOne personal loan, you need to be employed and earning more than $30,000 per annum (Centrelink can be used to support this income).

Are there any certain amounts or terms I should be aware of?

Loan amount limits

The minimum and maximum amounts you are able to borrow:

  • $5,000 to $50,000 for unsecured personal loans
  • $5,000 to $70,000 for secured personal loans

Loan terms

Your repayments are split over your loan term. A shorter loan term means less interest is paid over the life of the loan, while loans with longer terms will have lower regular repayments.

You can choose the loan term that suits you:

  • 2 years, 3 years or 5 years for unsecured personal loans
  • 2 years, 3 years, 5 years or 7 years for secured personal loans.

What happens when you don’t meet the repayments on a secured loan?

With a secured loan, you are providing the asset as security against the loan - meaning the lender has the right to sell your asset as a way to cover the cost of the unpaid loan.

Of course, if you are in financial distress or are in need of some short term financial support, you can discuss hardship and alternative repayment options with our friendly customer care team to try and avoid the need to forfeit your asset.

Have some more questions?

Our support team is here to help.