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.
If you are looking for a secured car loan, turn to Savvy. It’s our most popular type of vehicle finance, and with a panel of more than 40 lenders and experienced consultants to support you every step of the way, we can help you find the car loan you need. Get started with a free, no-obligation quote today!
Why apply for a car loan with Savvy?
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 car loan interest rates
Our car loan interest rates start from as little as 5.50% p.a. (comparison rate 6.56% p.a. as of May 2025), though the rate you’re offered will depend on factors like your credit score, the loan amount and the lender’s criteria.
After you apply, your dedicated Savvy consultant will assess your application and provide an indicative rate, so you’ll have a clear idea of what you can expect to pay.
The pros and cons of secured car loans
Pros
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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 limited credit history may have a better chance of getting approved.
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Improves credit
Making consistent and on-time loan repayments can help improve your credit score, demonstrating to future lenders that you are a responsible borrower.
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 is the most expensive car insurance option and can increase your overall expenses.
WHAT OUR CUSTOMERS SAY ABOUT THEIR FINANCE EXPERIENCE
Savvy is rated 4.9 for customer satisfaction by 6346 customers.
How to apply for a secured car loan with Savvy
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Fill out our simple online application form
Tell us about yourself and the car and loan you’re after. This will include information about your income, employment and credit score and helps us find the best available loan for you.
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Supply any required documents
After you complete your application, we may request further documentation to verify details such as your employment and income. These can be submitted online via our portal.
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Discuss your options with us
Once we have all the information we need, we’ll compare the offers available to you from our lending panel. Your consultant will reach out to you and talk you through your car finance options and process to get the all-clear.
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Find your ideal car
If you haven’t already decided on (or found) your ideal car, our in-house car broker team, Vehicles Direct, can search our national network of dealerships to find the best available model for you.
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Have your application prepared and approved
Once we have all the info we need, your consultant will get to work preparing your application for submission. You can receive formal approval as soon as one business day after it’s submitted.
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Sign on the dotted line
We’ll send through your final loan documents and other forms to sign electronically. Once settlement is complete (which we’ll also handle for you), you’ll be the proud owner of your new or used car!
Secured car loan eligibility and documentation
Eligibility requirements for a car loan can vary between lenders, but the following will typically apply:
- You must be at least 18 years old.
- You must be an Australian citizen or permanent resident (though in some cases you may be able to get a car loan on a temporary visa).
- You must have a stable income that can comfortably cover your car loan payments. This can come from employment or other sources such as Centrelink payments.
- You must meet your lender’s credit score requirements. A better credit score will typically qualify you for better interest rates, but you may still be able to get a loan with bad credit.
- Your car must meet your lender’s specifications regarding type, age and condition.
You’ll also need to provide certain documents, typically:
- ID: such as a passport or driver’s licence or another form of government-issued ID.
- Proof of income: you may need to provide your last two consecutive payslips (or your last tax return if you're self-employed) or 90 days of bank statements.
- Car details: information about your car such as the year, make and model.
How are secured car loans different from unsecured car loans?
Another option to buy a car is to take out an unsecured car loan. This is essentially a type of personal loan that doesn’t require the vehicle to be used as collateral. Instead, approval is based on your credit history, income and other financial factors. Because there’s no security backing the loan, lenders take on more risk, which can affect how much you can borrow and the rate you’ll pay.
Here’s how secured and unsecured loans differ:
- Loan use: a secured car loan must be used specifically to purchase an eligible vehicle, while an unsecured loan gives you the freedom to spend the funds as you choose – including on older cars or private sales that may not meet secured loan criteria.
- Borrowing limits: secured loans generally allow you to borrow larger amounts, often up to $100,000 or more, depending on the lender, while unsecured loan limits are lower, often capped at $75,000 or less.
- Interest rates: secured car loans come with lower interest rates than unsecured loans, as they’re seen as a safer prospect by lenders. The table below demonstrates how much of an impact a small difference in interest rates can make over the course of a $30,000, five-year car loan:
| Type of loan | Interest rate | Monthly repayment | Overall cost | Total saving |
|---|---|---|---|---|
| Secured car loan | 5.5% p.a. | $573 | $34,382 | $1,686 |
| Unsecured car loan | 7.5% p.a. | $601 | $36,068 | N/A |
Note: estimates do not include other car loan fees that may apply.
When it comes to choosing, an unsecured loan might be the better fit if you want flexibility, are looking at an older car or need to cover extra costs. However, a secured car loan will usually offer the better deal overall, thanks to its lower rates and higher borrowing limits.
