secured loan

Secured V/s Unsecured Business Loans Guide – Loaney

If you are looking forward to borrowing a loan, you must have found a wide range of options to choose from. There are different types of loans that you can borrow for your financial needs. While every loan has its own features, it can be classified into secured loan and unsecured loan. Understanding the differences between these two types of loans and knowing the features of various loans is important before you apply for the same and borrow the amount you need. In this article, we will be sharing with you all the details that you need to apply for your secured and unsecured loan. We will be looking at the secured and unsecured loans types, examples of these types of loans and compare the same to help you find the most suitable borrowing option for you. 

Loan borrowing has been a very common practice for getting the amount that you might need for any purpose. There are some basics of borrowing money that remain the same no matter where you borrow your loan from. Every loan that you borrow must be repaid with an interest charged on the same. There is a particular period within which the loan must be repaid and some documents that the borrower must present for the loan application to be approved. A collateral may or may not be involved when borrowing a loan. And this is the factor that majorly helps in differentiating between secured vs unsecured loan. In this article, as we share with you these two types of loans, example of secured loans and unsecured loans and other differences between the same, you will be able to shortlist the features that you need for the loan that you borrow.

What Is a Secured Loan?

Let us begin by defining secured loans. Secured loans are identified as the type of money borrowing and lending system where the borrower pledges collateral against the amount of money borrowed. The collateral can be any object that holds a certain value like a vehicle, a house or equity shares. In case the borrower fails to repay the borrowed sum of money, the lender has all rights to take full possession of the collateral. There is no secured personal loan and some examples of secured loans include home loans, car loans, loans against properties or loans against securities. In the next section, we will be discussing secured loan types.

What Are The Types Of Secured Loans?

Before we compare secured and unsecured advances, let us take a look at some secured loans examples and types in detail. 

  • Loan Against Property: this type of loan is offered against your residential or commercial property or a property that you will purchase with the money borrowed. Along with document verification, physical verification of the property is also conducted before loan application approval. You can get up to 65% of the value of the property as a loan. 
  • Loan Against Securities: this is an example of secured loans where the borrower pledges financial instruments against the amount required. These include equity shares, listed bonds, debt and equity mutual funds and traditional life insurance policies. 
  • Loan Against Gold: gold loan or loan against gold is another example of secured loan. As the name suggests, the borrower can get money against jewellery or coins made of gold. The value that can be borrowed goes up to 75% of the value of the collateral. 
  • Loan Against Fixed Deposits: the last example of secured loan is a loan against fixed deposits. You can get a loan amount of up to 85% of the total fixed deposit value. 

What Is Unsecured Loan?

Let us now talk about unsecured loans India and understand this type of loan to help you find out more about the same before you borrow a loan.  An unsecured loan does not require the borrower to pledge collateral against the sum of money he or she borrows. You do not have to submit any valuables in order to avail of the money you need. This leads to the interest on unsecured loans to be higher as the lender is at risk of failed repayment. Only your credit history, CIBIL score and other documents are required to get an unsecured loan. Some unsecured loans types include personal loans, credit card purchases, business loans etc. This also answers the question of whether a personal loan is secured or unsecured and we find that a personal loan is a type of unsecured loan. 

What Are The Types Of Unsecured Loan?

In this section, we will be taking a look at the different types of unsecured loans in India in detail.

  • Personal Loan: a personal loan is a type of loan that is borrowed very commonly these days by people for funding most of their urgent expenses. The borrower does not have to specify the reason for borrowing and hence the amount can be used by the borrower as required. The maximum loan amount offered as a personal loan is Rs. 15 lakhs. 
  • Education Loan: this is another one of the unsecured loan types that you can avail of for your urgent expenses or financing your daily living expenses as a student. 

We will now be comparing secured vs unsecured loans to help you know the differences between the two and choose the right type of loan wisely. 

Differences Between Secured And Unsecured Loans

We have defined the two types of loans and looked at the example of secured loan and unsecured loan. Let us now compare the difference between secured vs unsecured loan based on their features. We have compared the two types of loans here based on 6 parameters that will help you differentiate between these two loans better. 

  • Loan Amount: you can borrow a larger sum of money when you borrow any type of secured loan compared to borrowing any unsecured loan types.
  • Collateral: borrowing an unsecured loan will not require you to pledge collateral against the amount that you borrow. 
  • Tenure: the repayments tenure of unsecured loans is shorter compared to secured loans. The maximum duration of an unsecured loan is 5 years while a secured loan can be repaid over 15 to 30 years. 
  • Interest Rates: when compared to unsecured loans, secured loan interest rates are lower. 
  • Documentation: if you borrow an unsecured loan, the paperwork required will be very less compared to borrowing a secured loan. 
  • Speed Of Disbursement: the loan approval and disbursal procedures are faster for all types of unsecured loans in India.

Secured Loan V/s Unsecured Loan- Which Is Better?

In the previous section, we have compared the two types of loans by looking at the difference between secured and unsecured loans. The question that most of you might have now is which type of loan is better? The answer to this question depends majorly on what your requirement is and the terms and conditions you are ready to accept to get the required loan amount. If you are willing to pledge any secured assets in return for larger sums of money, then you can avail of a secured loan which will offer you lower interest rates and also help you get a loan for a bad CIBIL score. In case you do not wish to submit collateral and need a smaller amount of money for a very short period that you can repay with a higher interest rate, then unsecured debt is the better option for you. 

Things You Will Need To Consider In Order To Obtain A Loan

We have discussed above the two types of loans, unsecured loans and secured loans example and the differences between various types of loans. Before you borrow any type of loan or choose the type of loan that you wish to borrow, you need to take certain factors into consideration for the same. Here are some factors to consider when borrowing unsecured, secured loans:

  • Purpose Of The Loan: Why do you need to borrow the money? Is it for a business expense or a personal expense or an emergency? Knowing the purpose of borrowing the loan will help you easily determine the type of loan and choose between the different examples of secured and unsecured loans.
  • Amount Of Funds: Knowing the purpose of borrowing will also help you determine the amount that you exactly need to borrow. The amount you need will help you choose the right loan provider whether it is secured or unsecured loan providers as each of them will offer the same amount for different interest rates and time periods. 
  • Choose A Lender: This is one of the most important tasks when you borrow a loan. You must choose your loan provider wisely and make sure you get the best possible interest on unsecured loan and secured loan when finalising the lender. Also, make sure that you meet the eligibility criteria set by your loan provider before applying for the same. 
  • Paperwork: If you need money instantly, you might not have much time to get into a lot of documentation and paperwork. In such cases and every other loan borrowing situation, make sure that you can easily arrange the documents that will be required for getting the loan amount. Unsecured lending often requires less paperwork and is more suitable for emergencies. 

How To Invest In Secured And Unsecured Loans?

We have until now looked at the different types of loans and the differences between these loans and we have come to conclude that there is no secured personal loan and this type of loan is usually unsecured. If you are looking forward to borrowing secured, unsecured loans or small loans for your financial needs, Loaney should be your go-to destination for the same. Loaney is an online loan-providing platform that takes care of all your personal loan needs. The platform is easy to use and can be accessed using a variety of devices. You can get small loans on affordable interest rates for shorter repayment periods using Loaney. There is no need for collateral or a guarantor to borrow this loan. By submitting a few simple documents you can avail of your personal loan from Loaney. It is one of the best unsecured loan providers that you can choose to borrow money from no matter what you wish to use the amount for. Loaney is a safe and trustworthy platform that assures client data confidentiality.

Final Thought

We hope this article on secured vs unsecured loan has helped you understand the two types of loans better and also get answers to questions like whether a personal loan is secured or unsecured. As we conclude, we hope that this article will be beneficial for you in understanding the different loans, examples of secured loan and unsecured loan and the various types of each of these loans for your financial needs. 


A lot of our readers might have some doubts and queries regarding secured loan and unsecured loan. While we have tried covering all major topics when comparing secured vs unsecured loans, we will be answering some more questions that a borrower might have before applying for a loan. 

1. Are unsecured loans riskier than secured loans?

Unsecured loans are safe for the borrower but for the loan provider, unsecured lending is riskier compared to secured loans because there is no guarantee of the borrower. Hence, many lenders charge higher interest rates. 

2. What happens if an unsecured loan is not paid?

Failing to repay your unsecured debt can land you in trouble and your CIBIL score can go down by 40 to 80 points every time you fail to make a payment.

3. Can secured loan be written off?

Yes, your loan provider can write off your loan if you have borrowed any of the secured loan types and have a valid reason for the same. 

4. How do you calculate interest on secured loan?

The secured loan interest rates are usually lower because collateral is involved in such loans. The interest amount is calculated using simple or compound interest methods. 

5. Why is a secured loan easier to get than an unsecured loan?

There are different types of secured, unsecured loans and on comparing both we find out that it is easier to borrow secured loans. This is because these loans are less risky for the lender. Other than your credit history and CIBIL score, the secured assets submitted as collateral by you also helps you in easily getting this loan. 

6. What is the ideal CIBIL score to be eligible for an unsecured loan?

You must have a minimum CIBIL score of 750 to get your unsecured loans India.