What can I use as collateral for a secured loan?

Common collateral includes term deposits, savings accounts, vehicles (cars, motorcycles, boats), and sometimes investment portfolios. Each lender has different requirements.

What happens if I can't repay a secured loan?

The lender can seize and sell your collateral to recover the debt. With savings, they'll access your funds. With a car, they can repossess and sell it. Any shortfall remains your responsibility.

Is a secured loan worth the risk?

If you're confident in your ability to repay and the interest savings are significant, yes. However, if there's any doubt about your income stability, an unsecured loan is safer.

§ Tool · tier 1 · independent

Secured vs Unsecured Loan Calculator.

Compare secured and unsecured personal loans to see if using collateral saves you money

CalculatorFree, no signupOn-deviceupd May 2026

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Move the sliders or type in the form on the left — the math updates live as you go. Click Get AI verdict when you want a written analysis.

Should you secure your personal loan with collateral? This calculator compares secured vs unsecured loan options, showing you exactly how much you could save by using your car, savings, or other assets as security.

§ Worked examples

Real-world scenarios

Using Savings as Security

Lisa has $20,000 in term deposits earning 4% and needs a $15,000 loan.

Inputs

amount:15,000unsecuredRate:11securedRate:6

Securing the loan saves $1,900 in interest. Her term deposit still earns interest, so net benefit is even higher.

Car as Collateral

Marcus has a car worth $18,000 and needs $12,000 for home renovations.

Inputs

amount:12,000unsecuredRate:13securedRate:8

Saving $1,500 is significant, but he must maintain comprehensive insurance and risks losing his car if he defaults.

§ FAQ

Questions Australians ask

§ Glossary

Plain-English definitions

Secured Loan

A loan backed by an asset (collateral) that the lender can claim if you default.

Unsecured Loan

A loan based solely on your creditworthiness, with no asset backing.

Collateral

An asset pledged as security for a loan - commonly savings, term deposits, or vehicles.

Loan-to-Value Ratio (LVR)

The loan amount as a percentage of the collateral value. Lower LVR = lower risk = better rates.

§ Pair it with

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Loan Comparison Calculator

Compare multiple loan offers side by side

Personal Loan Calculator

Calculate repayments for either loan type

Guarantor Loan Calculator

Another way to get better rates without collateral

How to use

01Enter the loan amount you need
02Set your preferred loan term
03Add the unsecured rate you've been quoted
04Enter the secured rate available with collateral
05Select your collateral type and value

Key info

Secured loans typically have rates 3-5% lower than unsecured
Using savings as collateral can get rates as low as 5-6%
Your collateral must be worth more than the loan amount
If you default, you risk losing your collateral

Pro tips

Term deposits are the safest collateral - you keep earning interest while using it as security
Vehicle-secured loans require comprehensive insurance, factor this cost in
Even partial security can reduce your rate - ask lenders about this option
If your savings earn less than the rate difference, securing makes sense

Avoid these

Not considering the risk of losing your car or savings if you can't repay
Forgetting additional costs like asset valuation fees or insurance
Using an asset you might need to sell during the loan term
Overvaluing your collateral - lenders use market value, not sentimental value

Disclaimer: Estimates only. Interest rates, fees and policies change frequently. Always verify with lenders directly. General information, not personal financial advice.

Last updated · May 2026