Some people might swear by a cash-only lifestyle, however, truth be told majority of the population in India rely on credit to pay for their life’s big expenses over time. To buy a big-ticket item like a house or a car, start or expand a business, renovate your kitchen or so as to even pay for college, you can easily apply for a loan at either a financial institution or through an online medium to help you cover the expense.
So, most of the time when you have to consider the credit options available in the market, one always stumbles upon whether to opt for a secured loan or an unsecured loan. The primary difference between the two is the presence and absence of collateral, which acts as a form of security
to the lender in case, the borrows are unable to repay the amount on time.
Secured loans require that you offer up something you own of value as collateral in case you can’t pay back your loan, whereas unsecured loans allow you to borrow the money outright (after the lender considers your financials).
There are pros and cons to both types of loans, so before you decide anything it’s best to understand the strings attached.
Unsecured Loan vs. Secured loan :
Unsecured Loan vs. Secured loan: The Way Ahead
Before you apply for a personal loan, whether it’s a secured loan or an unsecured loan, have a clear plan on how you would be able to pay it off. Further, you should borrow what you know you need and can afford to pay back. Make sure you are comfortable with the repayment timeframe. Just because you can get a loan doesn’t mean you should, so take your time, do your research before making the decision of whether to opt for a secured loan or an unsecured loan.