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Secured and Unsecured Loan

The most important difference between a secured and unsecured loan is the collateral required to avail a loan. Usually, A secured loan requires you to provide the lender with a collateral that will be used as a collateral for the loan. Whereas unsecured loan doesnu2019t require you to provide an asset as collateral in order to get a loan.

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Secured and Unsecured Loan

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  1. Secured and Unsecured Loans

  2. Secured and Unsecured Loans Difference between secured and unsecured loans The most important difference between a secured and unsecured loans is the collateral required to avail a loan. Usually, A secured loan requires you to provide the lender with a collateral that will be used as a collateral for the loan. Whereas unsecured loan doesn’t require you to provide an asset as collateral in order to get a loan. Another key difference between a secured and unsecured loan is the rate of interest. As compared to unsecured loans; secured loans come at lower interest rate because of its features that carry a lower risk profile wherein a unsecured loans are considered to be risker loans by lenders due to its lower repayment capacity.

  3. Secured loans are easier to obtain while unsecured loans are harder to obtain, as it is less risky for a banker to disburse a secured and unsecured loan. Secured loans offer longer repayment period to repay the loan and impose affordable EMIs while on the other hand unsecured loans provide short repayment tenure that greats a burden of higher interest rate and higher EMIs. Secured loans are easier to obtain for the mere fact that they are less risky for a lender to give out, while unsecured loans are comparatively harder to obtain. These are yardsticks used to assess a borrower’s ability to repay the debt, and can include the borrower’s situation as well as general economic factors.

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