What is a secured car loan?

A secured car loan is a loan that’s secured against the car you’re buying. This means that you use your car as a security to ensure repayment. So, if you were to stop making your loan repayments, your lender could repossess your vehicle to recover their costs.

Aside from that, the loan works just like any other. You borrow a fixed amount, then repay it in regular instalments over the term of your loan, plus interest. 

You can use a secured car loan to buy a new or used car, although there may be some restrictions on the maximum age of the vehicle you can purchase. 

So, what are the perks? Well, if you’re thinking, should I secure a loan against my car, there are some big potential benefits for you too. With a secured car loan, you can sometimes get a better interest rate (which can mean lower monthly repayments) or you may be able to borrow a larger amount (hello upgrade). 

Just note that even though secured loans may potentially offer larger maximum loan amounts, the actual amount you can borrow will depend on you and your financial situation. 

Want to know more about all your car loan options? Get up to speed with our Smart Guide: The Complete Guide to Car Loans in Australia.

On the flip side, an unsecured car loan is a loan that’s not secured against your car. You simply borrow a fixed amount, repay it in regular installments, plus interest, until the end of your loan term. 

This means that you’ll usually have more flexibility over the car you’re buying. For example, if you want to purchase a car older than 12 years old, an unsecured personal car loan is likely to be a better fit. 

However, with unsecured car loans, the maximum amount available to borrow is often lower and interest rates can be higher.

At Wisr, we offer secured vehicle loans from $10,000 up to $147,000. But, as we mentioned earlier, how much you can actually borrow with a secured car loan will depend on you and your personal circumstances. 

Factors that can have an impact on the maximum loan amount you’re eligible for are:

• Your credit score

• Your income surplus 

• How much debt you already have

Basically, lenders will look at your ability to afford your loan repayments, the likelihood that you’ll keep making your repayments, and the number of financial commitments you already have to pay. 

Want to learn more? Read our guide, how much can I borrow with a personal loan?

Your eligibility for a secured car loan depends on a few key things:

• The car you want to buy

• How much you want to borrow

• Your credit score

• Your income surplus

Secured car loans are only suitable for cars that aren’t really old (we’re talking 12 years plus). The amount you want to borrow will also have an impact. This is because if your income surplus isn’t large enough for you to afford your monthly repayments, you won’t be able to take out that large a loan. 

Finally, your credit score will have a big influence on your eligibility with a particular lender. A good credit score will boost your borrowing power and give you more choice when it comes to picking a lender. A low credit score will have the opposite effect. 

Want to quickly check in with your credit scores? You can view your credit scores for both Experian and Equifax - two of Australia’s biggest credit referencing agencies - for free on Wisr App.

At Wisr, we offer loan repayment terms of 3, 5 or 7 years for secured car loans. The loan term you choose will affect the size of your monthly repayments and the total amount of interest you repay overall.

The shorter the time you choose to repay your loan, the larger your monthly repayments will be but the less interest you’ll repay in total. On the other hand, the longer your loan term, the smaller your monthly repayments will be but you’ll repay more in total interest.

The key benefits of opting for a secured car loan include:

• It could help you spread the cost of a car if you don’t have the spare cash to buy one outright

• Interest rates can be lower than with unsecured car loans and credit cards

• Maximum loan amounts are usually higher than with unsecured loans 

• Can be used for new or used vehicles 

• Car can be bought privately or at a dealership

• Making regular loan repayments could improve your credit score over time

As with all borrowing, there are a few things you’ll want to think about before taking out a secured car loan. 

• If you stop making your loan repayments, your vehicle could be repossessed to recover the cost 

• Missing loan repayments will have a negative impact on your credit score

• There may be age restrictions on the car you can buy

• You won’t fully own your car until the last repayment is made

• There may be extra considerations if you want to sell your car on before you’ve repaid your loan

Think a secured car loan is right for you? Then the first step is to get an online rate estimate to find out your loan options without affecting your credit score. This will tell you your personalised rate and your loan options with Wisr. 

If you like what you see, the next step is to choose your loan term and apply for a secured car loan. 

Want to see your Wisr secured car loan options? Get a quick rate estimate now in just a few minutes.