A loan secured by a legitimate or qualified asset is referred to as a secured loan. This asset, which serves as collateral, can be either a movable or immovable property owned by the applicants or co-applicants.
There are various types of secured loans, including Property Mortgage Loans (such as Home Loans and Loans against Property), Car Loans, Gold Loans, Working Capital Loans, and Loans against Shares.
These loans are typically suitable for self-employed individuals or businesses, especially for specific business needs (like working capital loans) or when there is a necessity to raise a substantial amount for a longer period.
Secured loans offer advantages over unsecured loans in terms of interest rates, loan amounts, and loan tenures. Generally, unsecured loans have tenures no longer than 4-5 years, while secured loans can extend beyond 20 years (as with Home Loans), thereby enhancing the loan eligibility of applicants. Interest rates on unsecured loans are significantly higher than those on secured loans, regardless of the prevailing repo rate.
The most common secured loans include Car Loans, Gold Loans, Loans against Property, and Home Loans, which can be availed by both salaried individuals and self-employed or business entities.
