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Secured/Unsecured Personal Loan

Personal loan is the best option available for people looking out for a way of getting easy and quick money to meet up their needs and demands. Various banks available in India like ICICI, PNB, and SBI give you the facility of obtaining this type of loan. You need to decide between the two types of personal loans available which are secured personal loans and unsecured personal loans.

Secured Personal Loans

Secured loans are a best option for availing a big amount of money at a lower interest rate. For availing this type of personal loan, the borrower needs to give an asset like home or land as collateral. This collateral convinces the lender regarding the low amount of risk involved. This gives the lender a surety of recovering the money even the borrower is unable to repay the amount in the future. Various banks providing secured personal loans in India include ICICI, SBI, and PNB. The borrowers need to submit the required documents asked by the banks and then get the loan.

To get a secured personal loan, credit check is one of the important steps included in sanctioning process. People with good credit history can easily get secured loans. People with bad credit history have to go through a much longer process. Bad credit history applicants need to submit collateral and then the loan amount is decided on the basis of the evaluation of your collateral. The process gives you an opportunity of getting a loan even with bad credit history.

Unsecured personal loan don't need any collateral as back up. The financial institutions lend money to its borrower with a certain rate of interest and a pre-decided time period in which the loan is to be returned. This type of loan has a high degree of risk as the lender doesn't have any thing as a security for recovering its money. The lender therefore lends a small amount of money at a higher rate of interest to its borrowers. Indian banks provide these unsecured loans to its borrowers by following a certain criteria.

The banks offering unsecured personal loans follow a certain procedure for sanctioning the loan, which also involves checking the credit history of a person. Person with a good credit history can easily avail this loan. With changing times, financial institutions are also offering people with bad credit unsecured personal loans. These unsecured personal bad credit loans lays down certain conditions for returning the money. These include imposing high rate of interest and providing a short time period for repaying the amount. The reason is the absence of any collateral which provides a repaying surety to the lenders.

Before applying for a loan, a person should have adequate knowledge about the two types discussed above. The credit history also plays major role in this. Secured personal loans in India is easily and conveniently available with a back up collateral. Although, unsecured loans don't have any surety or back up, this has not discouraged the lenders to lend money at certain Terms and Conditions.