What is a Secured Loan?

A secured loan is a loan given out by a financial institution wherein an asset is used as collateral or security for the loan. For example, you can use your house, gold, etc., to avail a loan amount that corresponds to the asset’s value. In the case of a secured loan, the bank or financial institution that is dispensing the loan will hold on to the ownership deed of the asset until the loan is paid off.

What is an Unsecured Loan?

Unsecured loans, like the name suggests, is a loan that is not secured by a collateral such as land, gold, etc. These loans are comparatively riskier to a lender and therefore associated with a high interest rate. When a lender releases an unsecured loan, he does so after evaluating your financial status and assessing whether or not you are capable of repaying your loan.