M.Com. CWA- Final
237 Points
Joined February 2009
Secured loan:- it means it is secured against something you own (an ‘asset’) – and failing to repay the loan could result in the lender taking possession of that asset, and selling it to cover their losses.
The asset in a secured loan will normally be your home, but it can also be your car or another item of a high value.
Unsecured Loan:- An unsecured loan does not require you to secure anything against the loan – the lender relies on your contractual obligation to pay it back.
Because there is no security and the risk they are taking is therefore greater, the amount you can borrow tends to be less, and the repayment period is usually shorter.