What is Secured and Unsecured Loans?

Posted Date : 09 Oct 2018

Posted By : Capital Need

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What is Secured and Unsecured Loans?

An unsecured loan is not protected by any collateral. The most common types of unsecured loans are credit cards, student loans, and personal loans. Eligibility for the unsecured loans, borrowers qualify based on their credit history and income. 

Example of Unsecured loan
Credit cards are a good example of Unsecured Loans, personal loans and business loans are also usually unsecured

Secured Loan :
Secured loans are the loans for which you need some assets to collateral. A mortgage or any car loans are the most common types of secured loan. 

Example of secured loan 
Suppose that you want to take a house and contact your Bank for the Home Loans. The bank says that they will surely give you the home 

loan but you need to keep your home as a collateral to the bank until the complete loan amount and the interest charges gets paid off. Moreover, The Bank may also offer you a reduced interest rate that is much lower than an unsecured loan. This makes the good understanding and coordination with your banks.