Secured Car Loan
A quick overview
A secured car loan is a type of car finance where the lender holds the car as collateral until the loan is fully repaid.
A secured car loan is one of the most common ways businesses, sole traders, and individuals finance vehicles. It’s simple, cost-effective, and widely accepted by lenders. What makes it “secured” is that the car itself, which is used as security for the loan. If you’re buying a vehicle mainly for business use, this is likely to be the first option your broker looks at. In this article, we’ll break down how it works, what makes it different, and when it’s the right fit.
What is a secured car loan and why do people get them?
A secured car loan is a finance option where the vehicle you’re buying is used as security for the loan. This means that if you stop making repayments, the lender has the right to repossess and sell the vehicle to recover the money.
Because of this added security, lenders offer better rates and more flexible terms than unsecured options.
You make regular repayments over the loan term, and once it’s paid off, the car is yours with no encumbrances (i.e. no more third party rights to the car). This type of loan is usually offered for new or near-new vehicles and is available to businesses, sole traders, and even individuals.
Secured car loans in Australia
In Australia, secured car loans are commonly used for business vehicles like utes, vans, or light commercial cars. As long as the vehicle meets the lender’s age and condition criteria, it can usually be used as security. Secured loans are easier to get approved for and come with lower interest rates.
Brokers often use this structure to keep repayments low, offer balloon options, and speed up approvals. If you’re buying a car through your business or ABN, it’s one of the fastest and most affordable ways to finance it.
For instance, a Newcastle mobile electrician buys a $55,000 Toyota Hilux for daily site visits. The vehicle is used as security for a secured car loan over five years. Because the car is new and used for business, the loan is approved quickly at a competitive rate, and no deposit is required. If this is a similar scenario to what you’re looking for, feel free to contact our team to get a quote today.