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Secured VS Unsecured Loan

  • Written by My Mudra
  • Published on 2023-01-25 12:24:43
Secured VS Unsecured Loan

What is Secured Loan?

A type of business loan or personal loan given by the financial institution like banks, NBFCs wherein an asset is used a collateral for the security. A secured loan is a one stop-solution for quenching financial thirst and making wiser financial decisions. It is offered on low interest rate on longer tenure. The banks, NBFCs will hold the ownership of the asset which is serving as collateral till the end of loan period. 

A secured loan is a good option for the person who has low credit score. Either a person can boost their credit score or can choose for the secured loan.These loans are usually provided at low interest rates except for bad-credit personal loan and short-term installment loans. The secured loans for business is a good option if a person  is looking for less risky form of financial aid. Personal secured loan is also a good choice for a person who has a collateral and in need of more loan amount. Pave way to success with a secured loan and be financially stable.  

Mentioned below are the secured loan types that can be applied by the borrower to satisfy financial needs. 

·     Home Loan

·     Loan Against Property

·     Working capital Limit

·     Life insurance loans

·     Home Loan Balance Transfer.

·     Raw material financing

·     Vehicle loans

·    Secured credit cards

·     Secured lines of credit

·     Bad credit loans 

What is Unsecured Loan?

A type of loan which does not require any asset to presented as collateral. This type of loan relies on the borrower’s creditworthiness and is known as signature loan. Usually, an unsecured loan offers higher rate of interest as compared to secured loan. This is more riskier form of loan which is offered by banks, NBFCs with perks like minimal documentation, quick disbursal. The lender assess the financial status and checks whether the borrower will be able to repay the loan. 

The unsecured loans can be approved with KYC documents, financial details and cibil score higher than 700. Get tips to increase your cibil score and increase your chances of getting a personal unsecured loan. A person can also apply for business unsecured loan by providing documents like financial statements, UDHYAM certificate, GST return in addition to the KYC documents and credit score. 

Mentioned below are the types of unsecured loans. 

·     Wedding Loan

·     Vacation Loan

·     Medical Loan

·     Salary Loan

·     Top-Up Loan 

·     Mudra Loan

·     CGTSME Loans

·    Micro Loans

·     Chartered Loan

·     Doctor Loan 


 Difference between unsecured and secured loan?

Unsecured Loan vs Secured Loan


Secured Loan

Unsecured Loan

Loan amount 

High Low Amount 

Low loan Amount 


Short tenure

Longer tenure


Collateral Needed 

Collateral not required 

Interest rate 

Low interest rate

Higher interest rate 


More documetation

Less Documentation

Days for Disbursement 

Slower rate of disbursement 

Faster rate of disbursement 

Which one is better secured or unsecured loan?

Secured or unsecured loans both are good adoption to quenchthe financial thirst of a person. An unsecured loan is a more riskier form of loan as compared to secured loan. But another important factor is that unsecured loans are offered with less documentation and provide quick disbursement. Therefore, the applicant should choose the best option among secured or unsecured loans.


The article above will guide you about secured and unsecured loans. It shall provide you with a brief of pros and cons of unsecured and secured loans. Get instant approval of loans and pave the way to success with My Mudra. We are here to change the perception of people who are taking loans as a burden to making a planned decision.