Secured vs Unsecured Personal Loan

Secured vs Unsecured Personal Loan: What is the Difference?

Unexpected emergencies or costs, like a medical emergency, an unexpected bill, a desire to travel, etc., may knock on your door, leaving you wondering what financing option to choose; a personal loan may be the best. It is quick and straightforward to complete, requires few documents, and deposits the loan amount directly into your bank account.

A personal loan’s primary unsecured nature, which means you can use it without pledging any assets, is another advantage that makes it the preferred choice for millennials.

What are Secured and Unsecured Personal Loans?

You pledge something you own as security to obtain a secured loan. You consent to your lender/financier having the right to seize the asset if you cannot make your EMI payments. Typically, the collateral for a mortgage or auto loan is your home or vehicle. Money in a checking or savings account or a fixed deposit may be used as collateral for a secured personal loan.

An unsecured personal loan is one for which no asset or collateral is pledged as security. Suppose you don’t pay your loan EMIs on time. In that case, the lender or financier cannot use collateral or another asset as payment. But either your secured or unsecured loans are in default. Your credit scores are impacted in that situation, which may make it harder for you to be approved for other types of credit in the future.

Unsecured and secured sources of personal loans

Three types of lenders that offer personal loans in India;

  • Banks
  • NBFC’s
  • Online loan companies

There is no denying that lenders’ standards for eligibility, supporting materials, repayment terms, and interest rates can vary greatly. Banks frequently favor lending to people with good credit scores and long credit histories. NBFCs can offer better interest rates and may be more lenient in their requirements when approving loans.

Online loan companies/lenders may offer lower interest rates for applicants with good credit scores. And because the entire loan process, from application to disbursement, is typically handled digitally, they can be convenient.

How to apply for an Unsecured Personal Loan?

Submit Applying for an unsecured personal loan online is a relatively straightforward process. You qualify for a personal loan if you are over 21, have Indian citizenship, and have a net monthly income of Rs. 30,000 or more.

You can complete an online application form by going to the Fintitude website. Please submit the following files:

  • An Aadhaar card, a driver’s license, a voter ID, etc., are examples of address proof.
  • PAN card
  • Income documentation, such as a Form 16 or the Last three month’s salary slip
  • Bank statement of salary account for last three months
  • Photos the size of a passport

The most convenient financing choice at this time is a personal loan. You can reaffirm your loan requirements with Fintitude and submit an online loan application. Therefore, register immediately to get personal loans tailored to your needs and goals.

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