Secured Trailer Loan vs Personal Loan: Which Is Better?
There are two main ways to borrow for a personal trailer: a loan secured against the trailer, or an unsecured personal loan. Each wins in different situations.
How they differ
A secured trailer loan uses the trailer as security. The lender records its interest on the national PPSR register until you've paid it off. An unsecured personal loan has no asset behind it. The lender relies only on your income and credit history.
Why secured is usually cheaper
With security, the lender has less to lose, so the rate is usually lower. Here's an illustration on a $20,000 loan over five years, with fees left out:
| Loan type | Example rate | Monthly repayment | Total interest |
|---|---|---|---|
| Secured | 9.5% | about $420 | about $5,200 |
| Unsecured | 14% | about $465 | about $7,900 |
The rates are illustrations only. Your rate depends on your situation, but the gap between secured and unsecured is typical.
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When a personal loan can make more sense
- The trailer is old or cheap. Many secured lenders have age limits or minimum amounts. A personal loan doesn't care about the trailer.
- It's a one-off or homemade trailer that a lender can't easily value.
- You want to bundle costs like a towbar, brake controller or accessories in one loan.
- You want flexibility. Some personal loans make extra repayments or early payout easier, though not all.
When a secured loan is the better pick
- The trailer is newer, from a known builder, and worth more than a few thousand dollars.
- You're borrowing a larger amount, where a lower rate saves real money.
- You'd like a longer term to keep repayments down.
Comparing offers
Compare the comparison rate, which includes most standard fees, and the total you'll repay. Check whether extra repayments are allowed and what it costs to pay the loan out early.