Unsecured or secured personal loans - what’s the difference?
Posted August 2022
At Unity, we offer both secured and unsecured personal loans. Whether you plan to buy a car, go on holiday, cover medical expenses or remove some daily stresses by consolidating your debts, we have options that could suit you.
So, what’s the difference between these two types of personal finance options and why should you consider securing your loan? Read on as we explore them below:
What is a secured loan?
A secured loan requires the borrower (you) to offer some form of asset (such as your car) to be used as the security. Because you are securing your loan with an asset, the interest rate is lower than on an unsecured loan. Unity’s interest in the security is registered on the Personal Property Security Register (PPSR) until your loan is repaid in full. If you, as the borrower, were to default on your loan, and Unity was unable to come to an alternative repayment arrangement with you, the security may be used to repay some or all of the debt owing to Unity.
What kind of asset can I use to secure a loan?
Examples of assets you could use to secure your loan include:
All vehicles taken as security must have a current registration and warrant of fitness.
What are the benefits of securing my loan?
The interest Unity offers on a secured loan is up to 2% lower than for an unsecured loan. Paying less interest saves you money over the duration of your loan. The maximum amount you can borrow on a secured loan is also larger than on an unsecured loan.
What is an unsecured loan?
An unsecured loan does not require the borrower (you) to provide any form of security – such as the assets listed above - when borrowing. Typically, this form of finance is offered in a smaller amount than a secured loan but is charged at a higher interest rate due to the lack of security.
Which type of lending is right for me?
At the end of the day, the type of loan that is best for you depends on your current financial situation, personal goals, and whether you have suitable security to offer.
Are you interested in a Personal loan from Unity? Simply apply online today. Need more information on secured or unsecured personal loans? Give us a call on 0800 229 943 or pop into your nearest branch to talk to our friendly team.