Be it a medical emergency, wedding expenses, or higher education, when it comes to financing, a personal loan is often coming to the rescue. The convenient process of loan approval, minimal documentation, flexible tenure, 48 hours of disbursal, all these aspects make the personal loan a popular choice among consumers. Sounds great, right? There is one more feature of a personal loan that is it can be both secured and unsecured. This feature can have an impact on your overall financial health. Whenever you borrow money from a bank or an individual, the lender may let you borrow the money with the condition of paying it back. Or, the lender may ask you to use an asset as collateral for the loan. This is when the concept of secured and unsecured personal loan comes. So, being a borrower, it’s highly essential to know the loan options available to you. Let’s have a look at both the loan options, how they work or differ from each other so that you can decide what is best for you!
What is a Secured Personal Loan?
In the case of a secured personal loan, you have to submit an asset to the bank or the financial institution as collateral or security. Once you repay your entire loan amount, you will get back the holdings again. But if you fail to make the payment, your asset can be taken over by the lender. Your assets may include a house, gold, or plot.
What is an Unsecured Personal Loan?
As the name suggests, an unsecured loan doesn’t ask for any security or collateral, which means a lender approves a loan based on the monthly income. Usually, these loans come with a high-interest rate. And after a proper evaluation of the borrower’s financial history and income stability, a lender sanctions the loan amount.
Which One To Choose? Secured Vs. Unsecured
When it comes to instant personal loans, we often come across the terms secured and unsecured. So, what are the differences between these two? Check out the below points so that you can decide what is best for your financial journey.
- Secured loans require an asset that will be used as collateral while unsecured loans don’t require any collateral to attain a loan.
- Secured loans usually have longer tenure like 15-20 years while an unsecured loan comes for a shorter tenure of 1-6 years. Choosing Buddy Loan will give you a flexible repayment tenure plan i.e. from 3 months to 6 years.
- Another major difference between secured and unsecured loans is the rate of interest. You can avail of a secured loan at a lower interest rate compared to an unsecured loan.
- Secured loans are comparatively easier to obtain than unsecured loans.
- If you are looking for big investments, then secured loans are a great option. For small purchases or emergencies, you can go with unsecured loans. Because they are easy to apply, user-friendly online procedure, require minimal documentation, and quick disbursal within 48 hours of loan application approval.
Make The Best Financial Decision
A personal loan is the most convenient and flexible financing way to fulfill all your requirements. Both loan types have their advantages and disadvantages, and they can vary depending on the situation, the lender, or the borrower. So, before you apply for a loan, make sure you have a clear understanding of all the aspects like tenure period, interest rate, and other factors. For instance, if you require a loan amount with longer tenure, then a secured loan is the best as you can repay the amount at your convenience. And when you are in urgent need of cash and looking for a quick loan approval and disbursal process, an unsecured loan is the savior. Depending on your requirements and seeing both merits and demerits, you can choose the suitable one. Also, don’t forget to do proper research and check your financial capabilities before you proceed.
How To Apply For an Unsecured Personal Loan?
Applying for an unsecured loan is extremely easy and straightforward with Buddy Loan. To avail of a quick personal loan, you have to be a citizen of India with a proper source of income. And also make sure, you have the below mandatory personal loan documents to verify your details –
- Identity proof – Voter/Aadhar/Passport/PAN card
- Address Proof
- 3 months salary slip
- Bank statement of last 6 months
The list of required documents may vary depending on the lender. Once you are done with the application process, lenders will verify the application and all the documents. And once the application gets approved, your loan amount will be disbursed in 48 hours. You can avail of a personal loan ranging from Rs. 1000 to Rs 15 Lakh for a tenure between 3 months to 6 years. The interest rate would be around 11.99% p.a. You have an option of flexible repayment and as per your convenience, you can customize the loan without bringing any financial stress to your life.
It is essential to select a loan type that will suit your needs. Depending on your current situation, make the right choice. Well, having a clear understanding will make your decision easier. Consult with the financial experts for further details!