What is Secured Loans?

Loans that must be secured by the promise of an asset or other kind of collateral are known as secured loans. The two types of secured loans that are most frequently used are home and auto loans, which require the borrower to put up the property or car they want to buy as collateral before the loan can be approved. The lender has the absolute right to take possession of the collateral or secured debt in the event that the borrower defaults on their loan repayment. One of the best and most reliable ways to get a lot of money is with a secured loan. Be sure to check out best personal loan in toa payoh for any needs.

The buyer is protected by a loan type known as a non-recourse loan, which falls under the category of secured loans. The asset promised as security for this loan is the only thing the bank may demand from the borrower going forward.

The legal procedure known as foreclosure allows banks to sell or auction off assets in order to recover unpaid debt.

Why are there secured loans available in the market?

Why would someone want to take out a secured loan when there are easily available unsecured loans? From the perspectives of the lender and the client, there are two main causes.

Borrowers are eligible for larger loan amounts that are offered on more favourable terms and lower interest rates since they have pledged an asset as collateral. Lenders are relieved of some of the possible financial load and loss that they could experience as a result of default on payments.

Characteristics of secured loans:

  • Loans are made based on the assets’ ownership titles, which are utilised as collateral (like homes, vehicles, assets, property).
  • More lenient repayment choices compared to standard loans.
  • Fixed rate and variable rate options; quicker loan approval.
  • Loans that can be tailored to meet certain needs.

These loans are accessible to those without regular employment.

Eligibility requirements:

For a secured loan, you must be qualified by fulfilling the following conditions:

  • The majority of banks and lenders demand that applicants earn at least Rs. 3 lakh annually.
  • Regular salaries, non-salaried income, and company income are all possible sources of income.
  • For loans based on business income, the enterprise must have been operating profitably for the previous three years.
  • The applicant must possess assets with a value equal to or greater than the amount of the loan requested.



Because the bank can rely on your desire to maintain your collateral, secured loans often have lower interest rates. If banks are confident that their investment in you is secure, they will lend money at reduced interest rates. Naturally, this results in simpler payments and a smaller overall impact on your personal finances.