Unsecured Personal Loan

An unsecured personal loan is a personal loan that you can receive without security to guarantee it. With secured loans, your lender secures the loan against one of your assets, for instance, your car or house, which enables them to recoup their losses if you fall behind on the loan repayments. With a loan that is unsecured, the lender has no such recourse if you fail to make the repayments. Of course any default on the loan is not a good outcome as the lender will probably pursue the repayment of the loan via legal proceedings, plus failure to repay will have a significant impact on your credit score.

Unsecured personal loans are offered by a wide range of lenders including major banks and credit unions through to building societies and most recently peer-peer lenders. Although the lender will probably ask for you to state the reason you are seeking to borrow the money, you can generally use unsecured loans for any purpose: debt consolidation, home improvement, car purchase, a wedding, or even a holiday. To estimate your monthly repayments of your personal loan try our relayment calculator below, simply enter your loan amount and preferred period, the estimated monthly repayment for each of the unsecured loans featured in our comparion table will then be calculated, to rank these simply click on the "monthly repayment" column header.

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  • Loan terms - Borrow between $3,000 and $40,000 for a period of 1 year to 7 years
  • Redraw facility - St George offers a convenient redraw facility. You can access any extra payments you have made for a fee of $9 (minimum $500 redraw amount).
  • Repayment options - Choose a consistent payment schedule of weekly, fortnightly or monthly to synch with your income streams.

  • Loan terms - Borrow between $3,000 and $40,000 for a period of 1 year to 7 years
  • Redraw facility - St George offers a convenient redraw facility. You can access any extra payments you have made for a fee of $9 (minimum $500 redraw amount).
  • Repayment options - Choose a consistent payment schedule of weekly, fortnightly or monthly to synch with your income streams.

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Unsecured Personal Loan Guide

This select the best guide is designed to provide you with the key information about unsecured personal loans which will assist you in your quest to select the best personal loan for your circumstances and needs.

1. No need to include any of your assets to secure the loan

With an unsecured personal loan the lender does not require you to provide any security against the loan, so if you do find you are unable to meet the obligations of the loan the lender will not be able to request that your surrender any assets to settle the debt. Though they will still have grounds to pursue the debt through legal action, should you default on the loan. As unsecured loans have no security attached to them they do tend to attract higher rates of interest and fees than secured personal loans.


2. What can I use an unsecured loan for?

Unsecured loans provide a great deal of flexibility when it comes to the purpose of the loan. Some of the more popular purposes are funding a wedding, a holiday, home improvements, debt consolidation, house furnishings and cosmetic surgery.


3. Getting approved for an Unsecured Personal Loan

All personal lenders will conduct a credit check as part of the application process. This credit check will reference your credit profile so it is important that your credit file is in good order with no blemishes such as CCJ’s or unpaid debts..

On time repayment of your unsecured personal loan is a great way of enhancing your credit profile as it provides evidence of your ability to repay debts of a medium size. This history of timely repayments will particularly useful should you wish to apply for larger loans such as home loans.


4. How much can I borrow with an Unsecured loan?

Unsecured loans are available for amounts up to $35,000, whilst secured loans are generally available for larger amounts up to $100,000. Unsecured loan terms tend to be in the range of 1 to 7 years compared to secure loans that can feature terms of up to 15 years.


5. What interest rates do Unsecured Personal Loans offer?

Unsecured Personal Loans generally feature interest rates in the range of 10-15% p.a. which when compared to credit card interest rates which are generally in the 18-20% range, are relatively competitive. Many unsecured personal loans also offer the option of a fixed rate enabling you to fix the interest rate and so the repayment for the full term of the loan.


6. Fixed and variable rates are available on unsecured personal loans

When rates are low fixed interest unsecured personal loans can be an attractive option, though may not suit the personal circumstances of all borrowers. Fixed rate unsecured personal loans make budgeting easier as you know what the repayments are going to be for the full term of the loan, on the down side the rates on fixed rate loans tend to be higher than variable rate loans and they feature less flexibility in terms of early payment or simply adding extra payments above the minimum required.  

Variable rate unsecured loans offer significantly more flexibility with the inclusion of  extra repayment options and redraw facilities in conjunction with the lower rates and fees


7. Unsecured loans with repayment flexibility

Unsecured personal loans frequently feature the ability to make extra repayments that enable you to make lump sum payments at any time during the loan term. Increasingly these extra repayments are being offered at no cost to the borrower.

In conjunction with the above extra repayment feature many unsecured loans are now offering redraw facilities that allow you to access the amount of any extra repayments you have made.


8. Comparing the cost of an unsecured personal loan

A good starting point to compare apples with apples when making a personal loan comparison is to consider the comparison interest rate. This is rate is designed to give an indication of the full cost of the loan, by combining the interest charges with any fees associated with taking out the personal loan.


Making an application for a unsecured personal loan

The application process for your personal loan will generally feature these 7 steps. To improve your chances of a successful application spend some time ensuring you have all the necessary documents and information to hand when you make your application.

  1. Work out the amount you want to borrow.
  2. Calculate how much you can afford to make in repayments.
  3. Work out how long it will take to pay off, and how often you want to make the repayments (weekly, fortnightly or monthly.)
  4. Decide whether you will require a secured (if buying an asset such as a car) or unsecured loan.
  5. Will a fixed or variable rate personal loan suit you?
  6. Compare personal loans online, look for one with a lower interest rate, lower fees and a term to suit your income levels.
  7. Organise any documentation and paperwork that is required to support you application and have this ready.

Frequently Asked Questions

What are the differences between a secured personal loan and an unsecured personal loan?

A secured personal loan is a loan when an asset owned by you is put up as security for the loan. In return for putting up the asset as security you generally pay a lower interest rate as their is less risk to a lender. An unsecured loan is where you don't have to provide any security for the loan but because there is higher risk, you generally have to pay a higher interest rate and fees.