Secured vs Unsecured Loans

Key Differences You Must Know

Loans are of two main types—secured and unsecured.

Understanding the difference helps you choose the right one for your needs.

What is a Secured Loan?

A secured loan requires you to pledge collateral like property, gold, or shares. The lender has the right to sell the asset if you default.

Examples of Secured Loans

Home Loan Car Loan Loan Against Gold Loan Against Securities

What is an Unsecured Loan?

An unsecured loan doesn’t need any collateral. Your eligibility depends on credit score, income, and repayment history.

Examples of Unsecured Loans

Personal Loan Education Loan Consumer Durable Loan Credit Card Loans

Interest Rates

Secured Loans: Lower interest rates due to collateral. Unsecured Loans: Higher rates as they involve more risk for lenders.

Loan Amount & Tenure

Secured: Higher loan amounts, longer repayment tenure. Unsecured: Limited loan amount, shorter tenure.

Risk Factor

Secured Loans: Risk of losing your pledged asset. Unsecured Loans: No asset risk, but default hurts your credit score.

Go for secured loans if you need bigger amounts & lower interest. Choose unsecured loans for quick, short-term needs without collateral.

Which One Should You Choose?

Conclusion

Both loan types serve different purposes. Pick wisely based on your financial goals and repayment capacity.

Secured vs. Unsecured Loans: Which Is Right for You?

Personal Loan or Loan Against Securities?

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