Unsecured vs Secured Loans: Which One Is Right for You?

This article is general information, not financial advice. Please verify terms with your bank/NBFC before acting.

Illustrative comparison – for education only.

Choosing between secured and unsecured loans affects cost, speed and risk. A secured loan requires collateral (like property or car) and typically offers lower interest rates and larger ticket sizes. An unsecured loan (e.g., personal loan) doesn’t require collateral but usually carries a higher rate.

Pros of secured loans: lower APRs, longer tenures, and higher eligibility for large goals. Cons: you risk the pledged asset if you default.

Pros of unsecured loans: quick processing and no collateral. Cons: higher APRs, lower ticket sizes, and stricter credit score thresholds.

Decision framework:

• If you own an asset and want the best possible rate for a large requirement, consider secured.
• If speed and flexibility matter (and loan size is moderate), an unsecured personal loan works.
• Always stress-test EMI affordability at +2% rate shock and for a short income interruption.