Secured and unsecured loans are types of financing offered by banks and non-banking finance companies to help customers meet their financial needs. Here’s a look at some of the key differences between the two:
Lenders sanction a secured loan when you pledge an asset as collateral, which acts as security. For instance, you can pledge your house or plot, gold, a vehicle, securities or fixed deposits as collateral.
Secured loans include mortgage loans, gold loans, loans against fixed deposits, vehicle loans and loans against securities. However, remember that your lender can seize and liquidate the asset if you default on a secured loan to recover the outstanding debt.
Unsecured loans do not require you to pledge any collateral. Lenders scrutinise your credit score to ensure that you have a good repayment history. Maintaining a credit score of 750 or higher is critical to availing an unsecured loan. In case of a default, your credit score will drop.
The two types of popular unsecured loans include:
- Personal loan
- Business loan
To apply for a Bajaj Finserv Personal Loan, fill in your details on the online application form, select the loan amount and tenor that suits you, submit the relevant documents and get the money in your bank account within 24 hours* of approval.