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Secured Loan Vs. Unsecured Loan - Which One Is Better For You?

Secured loans are secured by an asset pledged as collateral. Unsecured loans are the ones which don't require any collateral. Both have their merits and demerits. Here we take you through their various facets to help you choose the one more suitable for your needs.

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Secured Loan Vs. Unsecured Loan - Which One Is Better For You?

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  1. Secured Loan Vs. Unsecured Loan - Which One Is Better For You?

  2. Secured Loans Are The Loans That Are Given Against Some Kind Of Collateral. The Loan That Involves No Collateral Is Called An Unsecured Loan.

  3. • Interest Rate: The Interest Rate Charged On Secured Loans Is Lower Than Unsecured Loans. The Processing Fee For Unsecured Loans Is Also Higher.

  4. • Loan Amount: Lenders Sanction Bigger Secured Loan Amounts. Because Of The Possibility Of Defaults In Case Of Unsecured Loans, Smaller Amounts Are Sanctioned.

  5. • Collateral: For Secured Loans, The Lender Holds The Title/Deed Of Your Collateral Until You Repay Your Loan In Full. Those Who Do Not Own Have Any Such Asset Or Do Not Wish To Give It Can Opt For Unsecured Loans.

  6. • Borrower’s Risk: In Secured Loans, The Borrower Is Always Under Pressure To Make Timely Repayments To Make Sure His/Her Asset Is Protected. In Case Of Loan Default, The Borrower Can Retain His Property In Unsecured Loans.

  7. • Lender’s Risk: As Mentioned Above, Secured Loans Offer The Least Risk To Lenders As They Can Always Recover Their Money By Selling The Collateral Pledged. The Lender’s Risk In Unsecured Loans Is Bigger.

  8. • Eligibility: In Both Cases, Better The Credit History Better Will Be The Terms. However, The Eligibility Criteria For Unsecured Loans Are More Stringent.

  9. • Tenure: Secured Loans Have Longer Repayment Tenures Up To 30 Years But Unsecured Loans Have To Be Repaid Within A Few Years.

  10. Unsecured Loans Have Strict Eligibility Criteria And The Loan Terms Are Less Favourable Than In Secured Loans. However, With No Collateral At Stake, The Borrower Does Not Stand The Risk Of Losing An Asset. For Bigger Amounts With Longer Tenures, Secured Loans Are The Right Choice.

  11. Thank You !Would Love to Hear From You Hero FinCorp Limited 09, BasantLok, Vasant Vihar, New Delhi - 110057 Tel. 18001024145 Email Id: corporate.care@herofincorp.com Website: https://www.herofincorp.com/ Know more about- Secured Loan Vs. Unsecured Loan - Which One Is Better For You?

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