What is the difference between secured and unsecured loans?

Difference between secured and unsecured loans is a critical decision for your budget.

Unsecured Personal Loan

No collateral required. You don't fear losing assets. However, interest rates are higher. You need a good credit history. Banks are hesitant about low scores as the risk is entirely theirs.

Secured Personal Loan

Requires surrendering something valuable (Property, Car, Jewellery) as collateral. Benefits include lower interest rates and higher borrowing limits. Lenders are more amenable even to average credit scores.

The Trade-off

Unsecured = High interest + Convenience. Secured = Low interest + Risk of asset loss. Whatever you choose, be sure about your ability to afford the monthly installments.

Conclusion

Decision depends on your financial assessment. Check with big banks for terms or let experts help you get a loan that suits your budget.