A secured car loan uses an asset, usually the vehicle, as security; an unsecured loan has no asset pledged as security. That difference can affect the cost and what happens if repayments are missed, but both types must be repaid.
What does a secured loan mean for your car?
A secured loan gives the lender security over an asset. If you cannot repay, the lender may be able to repossess and sell that asset, subject to the applicable rules.
The sale does not necessarily clear the debt. Moneysmart’s repossession guide explains that sale and repossession costs can be added, and you may still owe an outstanding balance. Ask which asset is being offered as security before signing.
Does unsecured mean there is no risk?
An unsecured loan does not use an asset as security. Interest rates are generally higher because the lender has less protection if the borrower does not repay.
You still owe the money. Moneysmart’s personal-loan guide notes that a lender can take legal action to recover an unpaid unsecured loan. Some lenders may also ask for a guarantor, who could become responsible for repayments. Check any guarantee separately and make sure everyone understands it.
How should you compare the cost?
Request quotes for the same amount and term, then compare repayments, fees and the total amount payable. A comparison rate includes interest and most fees, but check its assumptions and the costs that apply to your own quote. Moneysmart’s car-loan guide explains this comparison.
Keep security and interest-rate type as separate questions. Knowing that a loan is secured does not tell you whether the interest rate is fixed or variable. Our guide to comparing car-loan quotes helps you organise the details.
What should you ask before applying?
Ask: Is any asset required as security? Is a guarantor involved? What is the total repayment amount? What fees apply if I pay the loan out early?
Bring the written answers and vehicle details to your broker. A product label or advertised rate alone cannot tell you which option suits your circumstances.
Aussie Loans is a finance broker. Explore our personal finance options and ask the team to explain the costs and conditions.
General information, current at 15 October 2026. This is not personalised advice. Finance is subject to lender assessment and approval; rates, fees, terms and eligibility vary.
