Difference Between Secured And Unsecured Loan

In order to meet the needs, various businesses and individuals take loans. Apart fromt this, in order to run or start the business or finance a trade, banks issue various kinds of loans. Whatever the form of loan, it is broadly classified into Secured and Unsecured Loan.

Secured Loan Unsecured Loan

1. it is issued by taking lien on assets.

2. it is common where creditworthiness of the borrower is in question.

3. it carries a lower rate of interest on the loan amount.

4. risk of losing the money lended is low.

5. it is assumed to be a cheaper means of borrowing.

6. this type of loans are usually taken for a longer period of time.

7. the lender can forfeit the asset of the borrower in case he or she defaults.

1. its is issued without taking any lien or charge on the assets.

2. it is common where creditworthiness of the borrower is very strong.

3. it carries a higer rate of interest on the loan or borrowed amount.

4. risk of losing the money lended is very high.

5. it is assumed to be a expensive means of  borrowing money.

6. this type of loans are usually taken for a short period of time.

7. the lender can sue the borrower in case he or she defaults.