While the lending industry is a field of play for many businesses that are on the path towards growth, one may always find a certain key differentiation within the category of loans; secured loans and unsecured loans. While these two categories build the foundation of every kind of loan that there is, they are also important in helping applicants figure out which one of the two loans can be most feasible and useful to them.
To make it simpler, we’ve broken down these two categories to help you best understand the various features of secured and unsecured loans, along with examples for each. This will help you understand the needs of your business and apply for a loan most suited for it.
Secured and unsecured, so what’s the difference then?
Secured: You would need a collateral or a guarantor for a secured loan.
Unsecured: Unsecured loans are collateral-free.
2) Rate of Interest
Secured: The rate of interest is low when it’s a secured loan.
Unsecured: The interest rates are much higher when it’s an unsecured loan.
Secured: Secured loans usually offer a tenure ranging from 15 to 30 years.
Unsecured: Unsecured loans offer a tenure up to 5 years, on an average.
4) Processing Time
Secured: The processing time is longer than that of unsecured loans.
Unsecured: The processing time is less and the amount is disbursed much faster.
5) Loan Amount
Secured: You can avail a secured loan as and when you need a large amount. While both the types of loans are well diverse, keeping the above points in mind, you can easily identify which loan suits your needs the best.
Unsecured: Unsecured loans offer you an amount which is lesser than that of a secured loan.
While both the types of loans are well diverse, keeping the above points in mind, you can easily identify which loan suits your needs the best.