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While a secured loan is backed by collateral such as a house, property, car, or gold. On the other hand, an unsecured personal loan is offered to you based primarily on your credit profile, personal loan eligibility calculator, and trustworthiness.

Let’s take a look at the pros and cons of both secured and unsecured personal loans to decide the best option for you.

Pros and Cons of Secured Personal Loans

Pros: This security in the form of mortgages offers an extra layer of protection for the lender, and hence, it makes eligibility for the loan more comfortable for you. The rate of interest is lower and more significant amounts since there is the security of collateral.

Cons: It is a high-risk venture. If you are unable to make payments on time and register as a defaulter, you run the risk of losing your home, your property, or any collateral. Each lender offers its own rules and regulations, and they might provide you with the option of repossessing your property as soon as you make the payments.

Pros and Cons of Unsecured Personal Loans

Pros: If you meet the eligibility, this is mostly a quick and hassle-free process. Most of which can be done online. There is less paperwork and no property assessment involved. While a missed payment may ruin your credit profile, you do not run the risk of losing your property.

Cons: They offer smaller loan amounts, require specific eligibility, and may have a higher rate of interest. While your property is safe, you still run the risk of becoming a defaulter and getting sued.

This list will help you decide which option is best for your next loan requirement.

Must Read: What are the Advantages of Unsecured Personal Loans?