When it comes to personal loans, there are two options available.

An unsecured loan, or a secured loan.

Each has their own benefits, but let’s first explain what each type of personal loan is.

What is an unsecured loan?

This type of personal loan is where you take out a loan without being required to provide any security or asset that you own, against it.

Effectively the lender has assessed you and is willing to lend you the money based on a legal contract you’ve agree to.

What is a secured loan?

This type of personal loan requires you to provide an acceptable asset to secure the loan. It will depend on which lender you apply to, as to what their acceptable assets are.

Generally, an acceptable asset is one that can have an interest legally listed against it by the lender. For example, any vehicle that is registered can have an interest listed, such as a car, motorbike, boat, caravan trailer etc.

This register or list is operated by the Australian Government and is called the Personal Property Securities Register or PPSR.

By having an interest listed against your asset, the lender has the ability to repossess and sell that asset in the event you stop repaying your loan and make no efforts to work out a repayment solution with the lender.

Once the asset is sold, the loan and any outstanding fees/ legal costs will be cleared. If there is any money left over, it will be provided back to you.

Can I use a mobile phone, jewellery or other personal assets as security for a loan?

In short, no.

Unfortunately, these types of items do not have an official register that a lender can legally list their interest against.

So these items, as well as many other personal assets such as handbags, TV’s, ipads, X-box’s, shoes and fishing equipment are not acceptable to be used as security for a loan.

Top 3 advantages of taking an unsecured loan

1. There is less paperwork required so the loan should be quicker to process.

2. You can be eligible for this type of loan without needing to own a registered asset.

3.  Unlike a credit card (which is an unsecured overdraft facility) these loans are set to be repaid and cleared so you’re not stuck with it forever!

boat loan

Top 3 advantages of taking out a secured loan

1. By offering security for your loan, adds extra strength to your application.

2. Generally you will be able to borrow more (based on your affordability) if you can offer security.

3. By taking a larger secured loan and repaying it on time will help your credit rating and ability to borrow again in the future.

Can you get bad credit unsecured loans and bad credit secured loans?

Yes you can, depending on your level of bad credit. Your first step should be to understand what your credit rating is, and what is listed on your credit report.

When you have this information, you can approach niche lenders like us, and we will be able to work with you to determine whether you are eligible for a bad credit unsecured or secured loan, and which may best suit your situation.

We hope this blog has helped explain the difference between unsecured and secured personal loans.

If you still have questions, please contact us either by our online chat service, by phone or by email. We’re here to help you go forward.

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Are you eligible to apply?


It can be expensive to borrow small amounts of money and borrowing may not solve your money problems.

Check your options before you borrow:
For more information about other options for managing bills and debts, ring 1800 007 007 from anywhere in Australia to talk to a free and independent financial counsellor.

Talk to your electricity, gas, phone or water provider to see if you can work out a payment plan.
If you are on government benefits, ask if you can receive an advance from Centrelink.

The Australian Government’s MoneySmart Website shows you how small amount loans work and suggests other options that may help you.

* This statement is an Australian Government requirement under the National Consumer Credit Protection Act 2009.