Secured and unsecured personal loans
A personal loan is rarely the cheapest money you can borrow, and it is not meant to be. Its job is access — funding something that sits outside the reach of a home loan, on a shorter term, often without touching your property. The question worth getting right is not "what rate can I get" in isolation; it is which structure fits the purpose, and whether a personal loan is the right tool at all once your broader position is on the table.
There are two broad shapes. An unsecured personal loan requires no security, which is why its rate generally sits higher — the lender carries more risk and prices for it. Amounts up to around $50,000 are available to eligible borrowers. A secured personal loan is backed by an asset, most commonly a motor vehicle, and usually attracts a more competitive rate than its unsecured equivalent because the lender has something to fall back on. Whether security helps you depends on what you are funding and what you already own.
Pricing on personal loans is not "black and white" the way home loan rates can be. The rate you are offered turns on several factors at once: whether security is offered, whether you own property, how your credit history reads, and how long you have been in your job. Two borrowers with the same loan amount can land on very different rates because their profiles read differently to the lender. Most personal loans carry a fixed rate, which gives you certainty over ongoing repayments; a smaller number of lenders offer variable rates, but fixed is far more common. Indicative rates and quotes depend on your full circumstances rather than a headline number.
Speed, credit history and the trade-offs
Personal loans tend to move quickly. Some products are approved in under an hour, though the lower-rate, better-structured options can take up to a day or two to assess properly. Once approved, funds are generally available the next business day, and rarely later than two. Speed and quality pull in opposite directions here, which is the trade worth being deliberate about — the fastest approval is not always the cheapest or the best fitted.
Credit history shapes access more on personal loans than most borrowers expect. Most lenders want a clean file. A small paid default with a telco or utility provider can still sit inside some lenders' policy; an unpaid default generally will not. As with any lending, this is a policy question rather than a verdict — the mark that closes one lender's door may sit comfortably inside another's appetite. The work is matching the file you actually have to the lender whose policy fits it.
When a personal loan is and isn't the right tool
For home improvements, a home loan is usually the cheaper path, because the rate is materially lower than a personal loan and the term can be longer. But "cheaper rate" is not the whole calculation, and there are clear cases where a personal loan wins:
- You are already at 80% LVR. Borrowing more against the property would trigger lenders mortgage insurance, which can run into thousands of dollars. Funding the renovation with a personal loan over, say, a five-year term can cost less in total than the LMI premium plus the interest carried on that premium across a 30-year home loan.
- You bought at 100–105% with a guarantor. In that structure you generally cannot increase the home loan, so a personal loan is the practical route to fund the work.
The other side of the same logic is debt consolidation. If you are carrying several monthly obligations — a personal loan, a car loan, card balances — rolling them into a single repayment by refinancing your home can simplify the picture and, in many cases, lower the combined monthly outgoing, even after adding a new vehicle. That is a structural decision, not just a rate decision, and it is worth modelling against your actual numbers before committing, because consolidating short-term debt into a long-term mortgage can cost more over the full term if it is not managed deliberately.
This is the part where a personal loan stops being a standalone product and becomes one piece of how your borrowing is arranged. Whether to use unsecured finance, secured finance, home equity, or to consolidate, depends on what you own, what you are funding, and what you intend to do next — not on which product is fastest to approve.
If you are weighing a personal loan against using your property, or trying to work out whether secured or unsecured is the right call, it is worth mapping properly before you apply. Book a strategy session and we will work through where you genuinely stand.
General information only — not personal financial product or credit advice. Lending is subject to each lender's policy, your full circumstances and responsible-lending assessment. AeFin is an Australian Credit Representative (CR 464548) of Finsure (ACL 384704).