4 things to Know about Secured and Unsecured Loans
You wake up one fine morning and learn that a sudden monetary exigency needs your attention. You are running short of liquid cash and can’t wait for the salary. Securing loan from bank would be a tedious process. Don’t worry! Unsecured loan would come to your instant rescue. No collateral, no lengthy documentation. Easy and short-term loans are readily available online from EarlySalary that have been instituted just to cater to your sudden monetary needs. The unsecured loan can prove to be your true savior by taking away the hassles associated with the secured loan.
Four essentials to decide the one which complements your needs
Secured and unsecured both have the sense of security innate to their etymologies. When you apply for online loans from non-banking financial companies, you essentially have to prove your repayment capability to be entitled to the same. Traditionally, you had to keep a security deposit as collateral to see your way through the loan. However, with the advent of Fintech era, need for such indemnities have been done away with by firms like EarlySalary. Four salient features that differentiate unsecured loans from secured ones have been focused upon to help you take a conscious and informed decision
1. Need for collateral
Secured loans require you to deposit a token of repayment assurance to the lender for availing the same. Unsecured loans are disbursed without any collateral provided you are a salaried professional. Your creditworthiness would be evaluated for deciding your loan eligibility.
2. Processing speed
Secured loans involve lengthy processing time due to the extensive documentation involved. Short term loans are usually not available. With the unsecured option, you can even avail of online loans for the shorter duration without any background checks. No credit check loans at affordable interests can be availed for various short-term needs like relocation, marriage, house renovation etc.
3. Risk of losing the collateral pledged
In case of secured loans, you may have to forgo your claim on the valuable mortgaged with the lender if you fail to comply with the terms of repayment. Low-interest rates may seem appealing for the longer duration, but the potential of losing your collateral is high. In case of unsecured loans, you can enjoy complete peace of mind as you stand to lose nothing valuable. Interest rates may be slightly high but the flexibility offered in repayment is unparalleled.
4. Variation in loan amount payable
In case of secured loans with the variable interest rate, you are subjected to the volatility of the economy and may have to end up paying more as loan EMIs. The possibility of interest rate going up, in the long run, is high. With unsecured loans, you are not required to pay even a buck more as the loan repayment installment and tenure remain fixed.
Summary of key differences between secured and unsecured loans
|Secured Loans||Unsecured Loans|
|1.||Fluctuating loan repayment EMIs||Fixed installments|
|2.||Available for medium to long-term||Can be availed of for exceptionally short period|
|3.||Lower interest rates||Slightly higher interest rates|
|4.||Collateral is a must||No need to pledge any valuable|
|5.||Extended processing period||Easy loans with negligible processing time|
|6.||Offered by banks and other institutions||Online loans from non-banking financial companies available|
|7.||Creditworthiness merely won’t do||Sound credit report for salaried professional would entitle one for the loan|
|8.||Larger value of loan has to be availed of||Small loans can be easily secured|
Why Unsecured Loans and Earlysalary?
EarlySalary has been instrumental in changing the dynamics of unsecured loans with its readiness to help out professionals like you with easy and swift monetary assistance. Small loans with no collateral are now available within your reach even if your creditworthiness does not measure up to market stipulations.