Unsecured or secured personal loans - what’s the difference?

NZCU Steelsands offer both secured and unsecured personal loans. Whether you plan to use your new loan for a car, to travel the world, or to remove the daily stresses and consolidate your debts, we have an option that suits you.

What is the difference between these two types of personal finance options? And which is best for you? Read on as we explore your options below:

What is an unsecured loan?

An unsecured loan is a type of personal loan that does not require the borrower (you) to provide any form of collateral or security to be held against the value of the loan. Typically, this form of unsecured finance is offered in a smaller amount than a secured loan, but is charged at a higher interest rate in order to cover the lack of collateral.

What is a secured loan?

A secured loan requires the borrower (you) to offer some form of asset, such as a home, vehicle or a boat, which is then used as collateral against the loan. Think of it in the same way as lodging a bond when you rent a property. Financial Interests are taken against these items and are registered on the Personal Property Security Register (PPSR), until the loan is paid off in full.

This asset acts as a security, which often means you’re more likely to qualify for the loan, allows you to borrow a larger amount, and also lets us (the lender) offer you a lower rate of interest on the loan, as there is less risk involved.

Which personal loan is right for me?

Which loan is best for you, depends on your current financial situation, security being provided (in the case of a secured personal loan), whether you have good or bad credit score. Each of these factors should be taken into account, as they will  all influence your application, the amount you can borrow, as well as the interest rate you will pay.

No matter what type of personal loan you are applying for - be it a travel loan, a debt consolidation loan or a home improvement loan - NZCU Steelsands will make sure you receive the loan best suited to your needs.

Are you interested in a personal loan from NZCU Steelsands? Use our personal loan calculator and apply online for your personal loan today.

Want to know your options?

Use our loan calculator