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Secured Loans vs. Unsecured Loans – Take Your Pick


When we are faced with a financial requirement, we would definitely look out for the options around us. However, what brings in the highest degree of confusion and is probably the first step in deciding the type of loan one should select is to decide between a secured and an unsecured loan. Both these loan types are alluring for the money offered by them. Both have their own set of advantages and disadvantages and hence it becomes really difficult to decide between the two.

Major loan types

Secured loans have been known since long and they are one amongst the oldest kind of loans. There were times when people used to take loans for agriculture by pledging their land or other valuable assets. Securing a loan gives a sense of relief to the lenders who definitely have something in their hands which can guarantee the return of their money. Unsecured loans are relatively new in the financial sector. These are basically designed in keeping the requirements of those who do not have assets to pledge as collateral or those who do not want to pledge their assets and properties for getting a loan. Such people were left alone and failed to get installment loan under the secured loans. In order to meet the demands of such people the unsecured loans were launched. One must remember that the lenders are in the business of lending money and the more they lend the more they earn.

Myths  on Secured loans

There are several myths which surround the loans. In relation to the secured loans most of the people are of the opinion that if one puts their home as collateral they will not be allowed to live in them till the time they clear the loans. This is totally wrong. In fact in case one puts their home as collateral all that happens is that the ownership rights are transferred to the lenders however, the borrower continues to hold the property and use it for their own purposes as early. The lenders can claim the home or repossess them only if the borrower fails to repay the loan amount. So if you are postponing your loan decisions just because of the aforementioned myth, it is time to leave it behind and go ahead with your decision.

A lot of people are of the opinion that unsecured loans cannot be tracked by the lenders. This is a myth and one should understand that the lenders are in the business of profit making. They would surely not make any decision which holds he risk of damaging their profits. Each loan request is processed and the approval is done only when the lenders are convinced of the fact that their money would be repaid by the borrowers in full. They also assure that they have the credentials and ample information with regards to the borrowers which can help them trace the borrowers in case they do not make regular payments or default on the loan.

Credit requirements

Credit history offers the details of the financial transactions made by an individual during their lifetime. It consists of all the transactions, debts taken, applied, repayments made, timely payments, delays, defaults, CCJs, bankruptcy or any other details. Those who have met their financial obligations diligently and have been current with the payments towards their debts will definitely hold a good credit history than those who have been irregular or defaulted their payment on account of any reasons. Though lenders prefer to make loan approvals for people with good credit history they are willing to make offers to those with bad credit history too with enhanced interest rates and stiff repayment terms.

More about secured loans

Secured loans are always the preferable kind of loans who have clear intentions of repayment and those looking for lower interest rates, lower monthly payments and extended loan term.

However, before deciding on the type of loans one should be clear about their requirements and should have a repayment plan in place so as to avoid any extra payment to the lenders in the form of fees and extra charges. To get more information about secured loans visit

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