{"id":12401,"date":"2023-08-29T02:53:39","date_gmt":"2023-08-29T02:53:39","guid":{"rendered":"\/blog\/?p=12401"},"modified":"2024-10-15T10:50:11","modified_gmt":"2024-10-15T05:20:11","slug":"a-complete-guide-to-secured-and-unsecured-personal-loans","status":"publish","type":"post","link":"https:\/\/tata-blog.osian.dev\/blog\/personal-use-loan\/a-complete-guide-to-secured-and-unsecured-personal-loans\/","title":{"rendered":"A Complete Guide to Secured and Unsecured Personal Loans"},"content":{"rendered":"\n

With the economic effects of the pandemic finally coming true, both\nindividuals and organizations are trying to get back on their feet and mend\ntheir finances. For individuals who had faced salary cuts and had delayed\npayments, a personal loan is often what comes to the rescue. There are two\ntypes of personal loans- secured and unsecured. What\u2019s the difference, and\nwhich one should you choose? Let\u2019s have a brief look. <\/p>\n\n\n\n

Secured personal loan<\/strong><\/h2>\n\n\n\n

When you avail a secured loan, you basically take it from an insurance\nagency along with an asset that can back up the loan. The asset is mortgaged\nfor the amount you borrow as a secured personal loan. Once you repay your\nentire loan amount, your asset can be free from mortgage and you needn\u2019t worry\nabout it anymore. However, till the time your loan is not repaid, your asset is\nvirtually held by the bank. If you fail to make the payment, your asset can be\ntaken over by the lender. <\/p>\n\n\n\n

There are various advantages of a secured personal loan. Since assets are kept as security, these loans are easier to procure and carry lower rates of premium. They also charge lower personal loan interest rates<\/a>. The finer details a different for each lender, but loan amount limits and repayment tenures are also higher when it comes to secured loans. <\/p>\n\n\n\n

\"Unsecured<\/figure>\n\n\n\n

Additional Read:<\/strong> How\nto Check Personal Loan Eligibility in India<\/a><\/p>\n\n\n\n

Unsecured personal loan:<\/strong><\/h2>\n\n\n\n

Unsecured personal loans are not protected by any collateral. Interest\nrates for these loans are generally higher as opposed to secured personal\nloans. These are usually taken by individuals who are able to repay smoothly\nwithout having to compromise on their assets. Unsecured loans are usually opted\nfor in case of student loans, credit card debt payments, etc. Interest rates\nare generally higher for unsecured personal loans. The principal amount could\nbe lower than that of a secured loan, and so would be the repayment\ntenure. <\/p>\n\n\n\n

However, there are numerous positives of an unsecured personal loan.\nThese are not as risky as secured loans, so you don\u2019t carry the stress of\nprobably losing your belongings. An unsecured loan process is much simpler,\nwith no collateral assets to evaluate and process. The documentation is much\neasier. One of the key advantages is that it is more accessible. You need not\nown assets to be able to borrow. You, however, do need a good credit history\nand credit score. This is something you can easily check online within minutes\nbefore applying for the loan. <\/p>\n\n\n\n

Picking a personal loan: Secured vs Unsecured: <\/strong><\/h2>\n\n\n\n

There are certain key aspects to consider before choosing any personal loan. The primary factor is, of course, the interest rate. Interest rates vary from lender to lender. The other key aspect is the process of acquiring the loan. Many a time, the need for a personal loan is urgent. At such a time, you wouldn\u2019t want to waste precious time on a long documentation process. You should always do your homework and conduct a quick check by comparing loans on an aggregator site. You can also check the personal loan EMIs<\/a> and interest rates offered by various lenders on their official websites. <\/p>\n\n\n\n

Based on all of these considerations, we strongly suggest an unsecured\npersonal loan over a secured one, because of the following factors. <\/p>\n\n\n\n