Brief discussion on Secured and Unsecured Loans

by Finway FSC Empowering People Financially

In the present world there is a constant change in every phase. New technologies and developments are continuously observed in all fields. The changes have become inevitable. A rise in the global economy has affected lives of millions in various ways. India is not an exception in this regard as it is considered to be one of the leading growing economies in the world. An increase in the living standard of people can be perceived in every day of life. One has to face relentless challenges to cope up in such a scenario.

The banking sector has a vital role to play in the growth of the economy of a country. In countries like India agriculture stands as the backbone which helps in the development of the country in large scale. The scheduled banks help the agriculture sector to flourish. Loans are provided by these Indian banks to the traders to improve the agricultural sector.

There are many commercial and co-operative banks in the country that provide personal or commercial loans to individuals and to organisations or entities. Private financial companies or individual money lenders are also there to provide loans for various purposes. Instant loans or salary advance are provided by many lenders on short term basis which is quite commonly practiced in India. These loans can be secured or unsecured loans. A brief discussion in this regard can be helpful for those looking for loans.

Secured Loans

The primary requirement in this type of loans is keeping collateral to get the application sanctioned. It is a loan against property or asset of an individual or organisation. The risk of the lenders in this kind of loan is less as compared to unsecured loan. Borrowers can get loan approved at a low interest as the risk is less. In case of default, borrower can lose their assets. The repayment tenure is generally higher than that of unsecured loans. One can apply for home loan in Delhi and in other Indian states. Purchasing car or two–wheelers can also be done through secured loans.

Unsecured Loans

This type of loans does not require collateral. The lenders take high risk as there is no collateral submission which increases the risk of default. Due to high risk, the rate of interest is higher than that of secured loans. It is less risky for the borrower as there is no chance of losing assets. Unsecured business loans are provided by many financial organisations. The repayment tenure is also less in such loans.