A secured loan is a type of loan that needs collateral or a security deposit in the form of any precious asset, or money. It may be your home, your vehicle, precious diamond or gold etc. The borrower provides secured loans on the prevailing amount of your asset. Banks take collateral as a possession of your loan amount. This loan has a very low risk for the banks and borrowers because it has the security of collateral value or asset you provided to your financial institution. There are several types of collateral-based secured loans you should know. It is far different from unsecured loans like SBI personal loans, HDFC personal loans etc. In a secured loan, you will get low-interest EMI which you can easily pay. You need to read the complete terms and conditions related to your secured loan while applying for the same.
Know the types of secured loans, their specifications and required eligibility.
Kinds of Secured Loans
There are several types of secured loans that you can borrow to make your dreams come true. For instance: you can take a car loan to purchase your dream car and a business loan to handle your business with ease. Top secured loans in the financial market are:
- Car Loan
- Mortgage Loan
- Non-recourse loan
- Home Loan
- Loan against insurance
- Gold Loan
- Loans of Bad Credit
- Loan against securities
Note: Most of the secured loans are provided against repossession terms and clauses and it acts for the beneficial aspects of the borrower. For instance: a home loan for purchasing a dream home, a car loan for a dream car/vehicle etc.
Specification of Secured Loans
Collateral: This loan is provided against the asset or the collateral you provide. It may be anything precious to you like your property, vehicle, any sort of big asset etc.
Offers Low-Interest EMI: Secured loans provide low-interest EMI to the borrower. One of the major reasons behind it is that banks trust you that you can pay the debts on time as you have submitted your collateral or asset.
Flexible Options: Secured loans offer several types of flexibility and offer to borrowers to lure them so that they can get the loans as soon as possible.
Quick Approval: Secured loans are quickly approved as compared to unsecured ones like SBI personal loans, ICICI personal loans etc,
Customizable Options: Collateral or secured loans provide customizable options so that the borrower gets a good opportunity to borrow loans.
Available to Non-salaried also: This loan has collateral, hence it is available for non-salaried professionals also.
No need for any type of guarantor: In this loan approval, you don’t need to have a guarantor. You will get a business, car, home or mortgage loan very easily as compared to a secured one.
Boost Credit Score: Once you have paid your entire loan amount, you will be eligible for a good CIBIL or credit score.
Criteria for Eligibility to Take Secured Loans
There are several eligibility criteria you need to follow in order to be eligible for the secured loan of your choice. You should read all the guidelines of the loan so that you stay away from the financial risks attached to it.
Here are the basic eligibility criteria to follow for every person who wants to borrow a secured loan:
- Must be a citizen of India
- Completed 18 years of his/her age.
- This loan can also be availed by NRIs, NRE and NRO including self-employed professionals and business personnel.
- Must have annual turnover or annual income of at least 3 lakh.
- In the case of a business loan, an enterprise must be at least 3 years old.
- Applicant must have a precious asset to be served to the lender as collateral.
Summary
Secured loans are a type of collateral-based loan means in this loan you have to submit a precious asset in lieu of your secured loans. This loan is provided by most banks and financial institutions.
