Compare secured and unsecured personal loans to see if using collateral saves you money
Updated October 2026Built and checked by MaverickHow it's calculatedReport an error
Monthly difference
$30
lower with the secured rate
Interest difference
$1,771
over 5 years
Rate gap
4.00%
12% vs 8%
Loan to security
75.0%
$15,000 on $20,000
The same amount and term at each rate.
Principal repaid plus interest. Fees aren't included: secured loans can carry extra costs, such as valuation fees.
Same principal in both: only the interest differs.
A loan secured against your car or savings usually comes with a lower rate, because the lender can take the asset if you don't pay. This shows how much that lower rate would save, so you can weigh it against the risk.
As of 7 November 2026, the lowest personal loan rate is 5.80%, from Plenti Personal Loan, while the typical best across 68 institutions is 7.96%.
Lisa needs $15,000 over 5 years. Unsecured costs 11%; secured against her $20,000 term deposit, 6%.
Securing the loan cuts the repayment from $326 to $290 a month and saves $2,169 of interest. The deposit is tied up until the loan is repaid.
Marcus needs $12,000 over 5 years. Unsecured costs 13%; secured against his $18,000 car, 8%.
The secured loan saves $1,783 of interest ($243 against $273 a month), but the lender can take the car if he can't repay, and it usually needs comprehensive insurance.