Secured car loans are the go-to option if you need to borrow money to purchase a vehicle. By tying the loan to your car, you can access more competitive rates and improve your chances of approval – making it an attractive choice for borrowers across Australia.
Secured car loans are our most popular type of finance. If you’re looking to buy a new or used car, we can guide you through the process. With access to over 40 lending partners and support from experienced consultants, we’ll find a loan that fits your needs and budget.
How do secured car loans work?
Secured car loans are a common type of common type of car loan where the vehicle you are purchasing serves as collateral. In other words, the car acts as security for the lender in case the borrower defaults on the loan. If you fail to make payments as agreed, the lender has the right to repossess the vehicle to recover their losses.
Because the loan is tied to the vehicle, it represents less risk for the lender – which can result in lower interest rates and higher borrowing limits than other types of finance. However, there will typically be other conditions attached, such as restrictions on the age and condition of the car.
Other than this, a secured car loan works like any other loan, where you borrow the money you need, then repay in regular instalments plus interest.
Secured vs unsecured car loan
Another way to finance a car purchase is with an unsecured car loan. This is a personal loan, where approval is based on your income, credit history and overall financial situation rather than the vehicle itself. However, because there’s no asset backing the loan, lenders take on more risk – which usually means higher interest rates and lower borrowing limits.
Here’s how secured and unsecured car loans compare:
| Secured car loan | Unsecured car loan | |
|---|---|---|
| Loan purpose | Must be used to buy an eligible vehicle | Can be used for any purpose, including older cars or private sales |
| Security | The car is used as collateral | No asset used as security |
| Borrowing limits | Typically up to $100,000 or more | Usually capped at $75,000 or less |
| Interest rates | Lower – lenders take on less risk | Higher – lenders offset greater risk |
| Flexibility | Funds must go directly toward the car | Funds can be spent however you choose |
Let’s look at how much a secured loan could save, based on a $30,000, five-year car loan:
| Type of loan | Interest rate | Monthly repayment | Total interest | Overall cost | Savings |
|---|---|---|---|---|---|
| Secured car loan | 6% p.a. | $580 | $4,799 | $34,799 | $2,131 |
| Unsecured car loan | 8.5% p.a. | $616 | $6,930 | $36,930 | – |
| Note: These figures are estimates and do not include other fees that may apply. | |||||
In this example, the borrower saved over $2,000. How much you could save depends on your profile and options, but in many cases choosing a secured car loan could cost hundreds or even thousands of dollars less.
While an unsecured loan may suit you if you want flexibility, are looking at an older car or need to cover extra costs, a secured car loan usually offers the better deal overall due to lower rates and higher borrowing limits.
Secured car loan interest rates
As of October 2025, the cheapest car loan interest rates available through Savvy are as follows:
Secured car loan pros and cons
Pros
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Higher borrowing limits
You might be able to borrow more as the car acts as collateral, reducing the lender’s risk.
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Lower interest rates
Interest rates for secured car loans are often lower compared to unsecured loans because there's less risk for the lender, helping to reduce the overall cost of the loan.
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Higher chance of approval
As the car acts as collateral to back the loan, borrowers with lower credit scores or a limited credit history may have a better chance of getting approved.
Cons
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Risk of repossession
If you fail to make payments, the lender has the legal right to repossess the car to recoup their losses.
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Restrictions on car choice
Your car must hold enough value to cover lost funds in case you default on your loan. As a result, there are restrictions on what car you can buy.
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Mandatory comprehensive car insurance
Lenders typically require comprehensive car insurance to be taken out on the vehicle, which can increase your overall expenses.
Why borrowers opt for secured loans
"Pretty much all the car loans we approve through Savvy are secured, so it’s far and away the most common (and often necessary) finance option for vehicle buyers. Even though you might be worried about potentially losing your car, this won’t be even remotely an issue if you keep on top of your repayments. Plus, the lower rates on offer could help you save hundreds, if not more, over the life of your loan compared to unsecured finance."
Why apply for a car loan with Savvy?
How to apply for a secured car loan with Savvy
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Apply online
Tell us about yourself and the car and loan you’re after.
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Supply your documents
Submit any requested documentation via our secure online portal.
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Speak to a broker
We’ll find the best loan offers from our lending panel and talk you through your options.
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Find your car
If you haven’t chosen a car, our in-house car broker can help you find one.
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Get approved
Your Savvy broker will prepare and submit your application.
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Sign on the dotted line
We’ll handle settlement and you can pick up your new or used car!
Secured car loan eligibility and documentation
Eligibility
- Age: you must be at least 18 years old.
- Residency: you must be an Australian citizen, permanent resident or eligible visa holder.
- Income: you must have a stable income that can comfortably cover repayments.
- Credit score: you must meet your lender’s credit score requirements.
- Car: your car must meet your lender’s requirements.
Documentation
- ID: such as a passport, driver’s licence or another form of government-issued ID.
- Proof of income: you may need to provide payslips or bank statements.
- Car details: information about your car such as the year, make and model.
