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HOW TO CHOOSE BETWEEN SECURED AND UNSECURED LOAN?


You might have heard about secured and unsecured loan offerings on your phone and emails with attractive interest rates from a particular lending institution these days but there are only few of us who understands the fundamental differences between both of them. Therefore, knowing the difference between both the loans is a crucial step towards gaining financial literacy an can help you in tough times when you are facing a financial crunch and need to apply for a loan to escape out of your problems.

Secured loans always ask for collateral as a security against the lent money which can be any of the assets that a borrower possess or in some cases it can be fixed deposits and provident funds. In case, if borrower fails to repay the loan money in fixed period, then ownership of collateral is taken by lender to recover their outstanding dues. Some of the relevant examples for secured loan are loans against property, gold loans and home loans whereas unsecured loans do not ask for any security and are disbursed on the repayment capability and creditworthiness of borrower. The best example of this type of loan is personal loans.

If you are suffering from a financial crisis and want to "Apply For Loan" then you should be well aware of both secured and unsecured loan. You just need to choose the right one according to your needs and affordability. So, here we are mentioning few aspects that help you choose the best option for you.

Your capacity to provide collateral: If you are in a need of bigger loan amount and you have any of these assets like any land or property or gold ornaments to give as guarantee then you can go with a secured loan such as gold loan, home loan etc. that too with a lower rate of interest while in case, you are unable to provide any asset, then you can apply for unsecured personal loan for instant funding.

The desired loan amount: If you are looking for small loan quantum then you can approach online lenders anytime to secure an "Online Personal Loan" as there are no restrictions on the end use of money and it is easy to apply for it from the comfort of your home. If you need a bigger loan quantum and you are not eligible for personal loan then you can go ahead with a secured loan.

The time when you need money: You can get approved faster for unsecured loans as they are collateral free and processed quickly. This makes online personal loans as the best choice for quick funding whereas if you need funds for planned expense then you can apply for secured loans.

Either its secured loan or unsecured loan, it is advisable to choose one that suits your need and which can fulfill your requirements as they have different features. The thing that is important for you is not to forget to analyze your repayment capability and affordability before choosing any of the loans.


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