Secured vs Unsecured Loan Calculator
Compare the repayment and total interest cost of a secured loan against an unsecured loan for the same amount and term at different interest rates.
Your results
Calculation breakdown
- Repayment
- amortised payment at each rate
- Saving
- unsecured total repaid − secured total repaid
Worked example
Borrowing $15,000 over 5 years at 7.5% secured versus 11.5% unsecured could save roughly $1,700 in total interest, reflecting the lower risk a lender takes when a loan is backed by an asset.
Assumptions
- Assumes both loans have identical amount and term, differing only by rate.
- Ignores any fees specific to registering security over an asset.
- A secured loan puts the asset at risk if repayments are missed.
How this calculator works
Secured loans, backed by an asset such as a car, generally carry a lower interest rate than unsecured loans, which rely only on your creditworthiness. This calculator compares the repayment and total interest for the same principal and term at each rate, to quantify the cost difference of using security.
Frequently asked questions
Why do secured loans usually have lower rates?
The lender can repossess the secured asset if you default, which lowers their risk and is generally reflected in a lower interest rate compared with unsecured lending.
What is the trade-off with a secured loan?
You risk losing the asset used as security if you cannot keep up repayments, whereas an unsecured loan does not put a specific asset at direct risk of repossession.
Which is better for me?
It depends on your risk tolerance, the asset involved and the rate difference; use this calculator to see the dollar cost difference before deciding.
Results are estimates only and are not financial, tax, legal or credit advice.