What Assets Can I Use as Security?
Australian lenders typically accept residential property, motor vehicles, term deposits, and certain commercial assets as security to secure a loan.
What security do lenders accept?
When applying for a secured loan in Australia, lenders accept various assets to mitigate their risk, which can help you unlock lower interest rates. For most consumer and household borrowers, residential real estate—such as an existing home or investment property—is the most widely accepted form of security due to its stability and long-term value.
Motor vehicles, including cars, caravans, and boats, are also commonly accepted security for personal and auto loans. Lenders usually require these assets to be unencumbered or have sufficient equity, and they often enforce strict age and condition limits to ensure the vehicle retains adequate market value over the loan term.
The borrowing power tied to any asset depends on its Loan-to-Value Ratio (LVR) and a formal valuation. While residential property can often support an LVR of up to 80%—or higher with Lenders Mortgage Insurance (LMI)—depreciating assets like motor vehicles generally attract lower LVR caps and shorter loan terms to account for faster depreciation.
Because security requirements, LVR limits, and valuation rules vary significantly across Australian banks and specialist lenders, choosing the right approach is essential. A Lonix broker can compare options across multiple lenders and structure your loan to make the most efficient use of your available security.
Related questions
- Can I use a used car as security for a personal loan?
- Yes, many Australian lenders accept used cars as security, provided the vehicle meets their specific age criteria and holds a clear title.
- What is the difference between secured and unsecured loans?
- A secured loan requires an asset as collateral, usually resulting in lower interest rates, whereas an unsecured loan relies purely on your income and credit file.
- Do lenders accept shares or savings as loan security?
- Some lenders accept cash term deposits or approved share portfolios as security, though residential property remains the most common choice for consumer loans.
- What happens if the value of my secured asset falls?
- If an asset's market value declines significantly, your Loan-to-Value Ratio (LVR) increases, which may impact your refinancing options or equity availability in the future.