Secured and unsecured loans: Which should you choose?

Personal loans can be a multipurpose solution for your varied financial needs. Whether you need money for meeting an emergency, planning a trip, home renovation, or a business venture, personal loans can help. Moreover, with the different types of loans available, you can find the right solution for your financial needs.

Personal loans can be categorised under two main heads - secured and unsecured loans. Both types of loans offer quick and easy funds, but they differ in features. Each of them also has their respective pros and cons. Let’s understand the differences and comparative advantages of each.

What are secured and unsecured loans?
 

Secured personal loans are those which require collateral security. The loan amount depends on the value of the pledged security. A common example is a gold loan, offered against gold jewellery and ornaments. You pledge your gold assets and get a loan based on their value.

Unsecured personal loans do not require collateral security. They are sanctioned based on your income and other eligibility parameters. Regular personal loans, including FIRSTmoney, are unsecured loans issued without security.

Pros and cons of secured and unsecured loans
 

Now that you know the meaning of these loans, let’s understand their respective benefits and drawbacks.

Secured loans 
 

Unsecured loans

Difference between secured and unsecured loans
 

Here’s a look at the differences between secured and unsecured loans –

FIRSTmoney – An unsecured financial solution 
 

While you understand the difference between secured loans and unsecured loans, there’s another option to consider – FIRSTmoney. It is a smart personal loan that offers instant access to funds of up to ₹10 lakhs.

With FIRSTmoney, you don’t have to pledge any asset as collateral, and you can enjoy –

1. Low processing fee
2. Zero foreclosure charges
3. Interest only on the borrowed amount
4. Seamless digital application process with zero paperwork

The eligibility criteria for FIRSTmoney are –

1. You must be a salaried or self-employed individual between the ages of 21 to 60 years
2. You must have a CIBIL score of 730 or above

To apply for a FIRSTmoney personal loan, follow these simple steps -

1. Start by scanning the QR code or clicking loan from your smartphone
2. Register using your mobile number and confirm basic/personal details to check your eligibility
3. Select the loan amount of your choice and choose from flexible repayment terms
4. Link your bank account where you wish the funds to be disbursed
5. Complete the Video KYC verification process with your physical PAN card

Start making smart choices today
 

Both secured and unsecured personal loans have their pros and cons, and the ideal fit for you depends on your unique needs. However, if you don’t have adequate assets or if you need instant funds, choose FIRSTmoney and fulfil your financial needs without hassles. To get started, apply for FIRSTmoney by IDFC FIRST Bank today!