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Secured Loan is the one type of the loan.

In this type the person offers something as a collateral in case he/she can't repay the loan.

There are many types of secured loan, some of them are:

1. Vehicle Loan

2. Home Loan

3. Life Insurance Loan etc.

Some of the advantages of the secured loans are:

1. Low Interest rate: Due to collateral the interest rate of the secured loan is less.

2. You can take larger amount with low interest rate.

3. Secured loans has longer repayment period.

For example, if you take the Home loan for the house construction then the home is as collateral for the time span till the person repay the loan.


Unsecured Loan: The unsecured loans are the another type of the loan.

In this type of loan the person doesn't offer anything as a collateral.

Some types of the Unsecured loans are:

1. Personal Loan

2. Student Loan etc.

Advantages of the unsecured loan are:

a. Faster approval of loan because no assets are there to evaluate.

b. For borrowing small amount the unsecured loans may be better option than the secured ones.

The main disadvantage of the unsecured loans are the interest rate. The interest rate in case of unsecured loan is more as compared to secured loan. Because there is risk involve for the Bank who gives the unsecured loan.

Although they use security measures like analyzing the salary of the person, efficiency to repay the previous loan etc. 

But for more security a bank charges more interest rate.