Personal loan

Knowing the difference

Secured vs unsecured loans

A secured loan is a type of finance where an asset is held as a collateral by the lender. In most instances, the asset being purchased is used to secure the debt. This type of finance bears lower interest rate than an unsecured loan. If a person fails to honour his/her commitment towards the debt, the lender can sell the asset to recover their funds.

An unsecured loan also referred to as a personal loan is a finance product which does not involve any collateral. In other words, a person does not need to provide an asset as security to obtain this loan. Personal loans bear higher interest rates, usually over 10%, as lenders have greater exposure towards the loan.

Eligibility:

• Must be 18 years and over
• Be a permanent Australian resident
• Good credit history demonstrated in the last 5 years
• Must be off probation
• Main income must not be from Centrelink

Purpose of the loan:

• Car
• Renovations
• Holiday
• Medical
• Other

What is on offer

• Minimum lend is $5000
• Loan term can be between 2 – 7 years
• Fixed interest rates
• Ability to pay weekly, fortnightly or monthly