What is a secured vs unsecured loan?

What is a secured vs unsecured loan? | Personal Loan FAQs

Last updated: 18 May 2017

Are you thinking about getting a personal loan and have some questions? Don’t worry, so does everyone else! We answer some of the frequently asked questions about Personal Loans here so you can be in the know!



Secured personal loans require you to put up an asset as security. Your security may be a car, boat, jewellery, art, business equipment etc.

If you default on your repayments and fail to make appropriate arrangements with your lender to repay your loan, they have the legal right to take possession of the security and sell it in order to recover their money. This makes a secured personal loan less risky for the lender than an unsecured personal loan, so they generally charge lower interest rates.


Unsecured personal loans do not require you to put up an asset as security. This makes them more risky, so they attract a high interest rate.

If you fail to make your repayments, your lender can take legal action against you to recover their money.

With no security attached, you need to convince your lender that you are able to repay your loan. To better your chances of being approved, some lenders allow you to appoint a guarantor who offers up security that the lender can claim possession of if you fail to repay your loan.


Still have questions?  You can read more about what you need to know about personal loans here in our Learning Hub.

Learnt something?  If you think that now you know a little more about them that a personal loan might be right for you, you can compare a variety of personal loans right here on our comparison platform.