Comparison between Secured loans and Unsecured Loans

by Finway FSC Empowering People Financially

The money lending system is not a modern concept but going around for centuries. From early days, money lenders offer money to the individuals for various purposes of that particular person. These loans were given against some property or other items owned by the individual. The borrowers were liable to pay interest until the debt, that is the principal amount is repaid. In present world, the system of money lending goes the same. Keeping the primary purpose similar, the difference now is that currently government organisation or entities like bank and many private organisations provide loans to individuals, or other organisations or entities.

In India, several government owned and private banks and other financial organisations are there which are providing loans to individuals or to organisations for personal or organisational growth. Low interest home loans are easily available apart from other loans under numerous schemes from these institutes. Business loan in Delhi is quite common in the capital city of India as the region is one of the booming places of industrialisation in the country. These are beneficial for both start-up business as well as the existing reputed organisations.

Secured and Unsecured loans both are obtainable presently. Secured loans are provided against any personal or business asset which acts as collateral or security. Unsecured loans do not require any collateral.

Mortgage loan or loan against property is a funding solution which is quite a time consuming task. The application has to go through a daunting process of approving the loan. It is due to the thorough inspection of the asset that has been kept as the security against the loan. Failure in repaying the loan may lead to taking over the stressed asset by the lending organisation. This type of loan is secured for the bank or the financial organisations that are providing the loans. There are lot of cases of non – payment of loans. Thus it becomes essential to keep a mortgage for the security of the loans. Loan against property in Delhi and other major cities are widely provided by various indigenous and foreign financial organisations.

In case of unsecured business loan, no personal or commercial assets are kept as collateral. These loans are mainly given on the basis of credit score and detailed analysis of cash flow of the borrower. The financial organisations or the entities take a big risk in such cases as there is no collateral security. However, it is very beneficial for those planning to set up a business with minimum capital. This type of loan has higher interest rate.