12 OCTOBER 2022

What is a Secured Car Loan?

5 min read

A secured car loan is a loan where the lender guarantees or possesses security over your car, for the duration of the loan. This means that the lender could potentially sell your car and recoup their money if you’re unable to repay the loan.

Sienna Cowles
Marketing Analyst
Car dealership with lots of cars

A secured car loan works slightly differently to an unsecured loan and may have several benefits depending on your financial circumstances and needs. Learn more about secured car loans and how you can apply for one with Money3.

How Does a Secured Car Loan Work?

In a secured car loan, your car is treated as an asset that the lender can take possession of if something happens resulting in your inability to pay back the loan. Due to the added security, a secured car loan is considered more low-risk than an unsecured car loan.

Similar to other types of loans, you can discuss your financial circumstances and goals with your lender before settling on the conditions of your secured car loan.

Money3 could help ensure that your secured car loan repayments are affordable to you, and you’re able to reach your financial goals.

Benefits of a Secured Car Loan

There are many potential benefits to secured car loans which can make them preferential to unsecured car loans.

Below are a few to be mindful of:

  • You can typically borrow more - secured loans have an asset (in this case, your car) lenders can fall back on, and hence, they are more willing to let you borrow higher amounts.
  • Lower interest rates - a secured loan usually has a lower interest rate than a comparable unsecured loan due to a lower credit risk with a secured asset as security
  • Borrow on a fixed rate - most secured car loans offer a fixed rate option, where you can borrow money with a fixed interest rate. This means you’re able to budget and prepare for regular monthly repayments.

A secured car loan may be advantageous depending on your financial situation and risk preferences.

Get in touch with the team at Money3 to learn more about the potential benefits of a secured car loan for you.

Applying for a Secured Car Loan

When applying for a secured loan, it may be helpful to first understand the loan’s lending criteria. Different lenders may have varying eligibility requirements for their secured car loan options.

At Money3, we’ll give you a fair go at applying for a secured car loan. We provide a flexible service and can help finance your dream new or used car, even if you have a poor credit rating, are on Centrelink payments* or have been turned away be lenders before.

As responsible lenders, you must meet the following criteria to be eligible to apply for a car loan pre-approval with us:

  • Be Over 18 Years Old
  • Have Take Home Income or Benefits over $480 a Week1
  • Be an Australian Resident
  • Get Your Income Paid into Your Bank Account
  • Be Employed or Receiving Centrelink payments1

Find out more about car loan requirements here

After we have checked that you meet our eligibility criteria, we will review your application and update you on its status via email or SMS. In the case that your application is pre-approved, once you have found a suitable vehicle, we may need to re-verify your details before funding your secured car loan.

Secured Car Loan FAQs

The main difference between secured and unsecured loans is the existence of an asset acting as security. In an unsecured car loan, there is no car acting as security against the loan. This means that an unsecured car loan has a higher risk profile than a secured one - however, you won’t need collateral.

Money3 does not offer unsecured car loans; all our vehicle loans are secured against the vehicle financed.

When comparing car loans and determining which is better, it’s important to consider your financial goals and preferences. If you prefer a low-risk loan with lower interest rates and regular monthly repayments, you may find secured fixed car loans to be better than unsecured car loans.

Money3 does not offer an unsecured car loan product; all our vehicle loans are secured against the vehicle financed.

Secured car loans are generally easier to get than unsecured car loans as they are lower risk than unsecured car loans to lenders. However, they may require you to keep up with your repayments or your lender may otherwise sell the car.

1. Subject to verification, suitability and affordability

Also check out the related articles below:

How do car loans work?

If you’re looking to get a car loan, it may be helpful to first learn how car loans work. Money3’s guide covers everything you need to know.

Basic Breakdown: Fixed Vs. Variable Interest Rate Car Loan

Are you curious about the differences between a fixed interest rate and a variable interest rate car loan? Check out Money3’s basic breakdown.