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Borrowing

Secured and unsecured credit

Unsecured credit is repaid from your income. Secured credit also gives the lender a claim on an asset if you do not pay.

Reviewed 29 October 2026 by the WiT Money editorial team. This is general information, not a recommendation from a named adviser.

Key points

  • Security does not remove the duty to assess affordability.
  • A home or a car can be sold if the secured debt is not paid.
  • A lower rate on secured credit can still be the wrong product if you do not need the asset.

Unsecured credit, such as a personal loan or a card, is collected from your income. If you fall behind, the provider can take judgment and use the enforcement routes the law allows. It does not start with a mortgage over your house.

Secured credit adds an asset. A home loan is secured by a mortgage bond. Vehicle finance is usually an instalment sale: the financier keeps ownership until you have paid. Missing payments can end with the house or the car being realised. The rate is often lower because of that security. The consequence of default is larger.

Which contract you are in

Read whether you are borrowing cash, buying on instalment, or signing a mortgage. The labels in adverts overlap. The contract type decides who owns the asset and what can be repossessed.

Juristic persons

The National Credit Act does not treat every loan to a company the same way it treats a loan to a consumer. Turnover and asset thresholds matter. A small business owner who also signs a surety can still be personally exposed. Ask the lender which rules apply before you compare the rate with a consumer loan.

Questions readers ask

Is a lower rate always better?

Only if you need the asset and you can pay the instalment. Cheap secured credit used to fund a purchase you cannot afford is still a bad agreement.

Related

Sources

Page updated 29 October 2026. A source date is the day WiT Money checked that page, not a promise the institution has not changed it since.