Secured Loans

Secured loans entail borrowers offering collateral, such as a home, car, or other valuable property, to guarantee repayment to the lender. In the event of non-payment according to the agreed terms, the lender can seize the collateral. This setup reduces risk for lenders, often leading to lower interest rates and more favorable loan terms for borrowers.

Within the realm of secured loans, there exists a type called a non-recourse loan, which offers additional protection to the borrower. With this loan, the lender cannot pursue any assets beyond the collateral provided in case of default.

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Secured Loans

Industrial
Property
Loan

Loan Against Property

Working
Capital
Loan

Dropline
Overdraft

Bank
Guarantee

Letter of
Credit

Loan
Against Bank
Guarantee

Commercial
Property
Loan

Builder
Inventory
Funding

Loan
Against Rent
Receivables

Bank
Overdraft

LC Discounting

How Do Secured Loans Work?

Debt products backed by an owned asset are known as secured loans. The assets you intend to use as collateral for a secured loan must be disclosed to the lender when you apply. A secured loan allows you to pledge an asset as collateral, such as your house, vehicle, or boat. The lender will put a lien on your until you repay the loan.

Lenders may seize and sell the collateral to make up for losses in the event of a loan default. The majority of secured loans are instalment loans, which means you get your entire loan amount all at once and have to pay it back over time in EMIs. Mortgage loans have 30-year repayment terms, while secured personal loans have shorter terms of one year.

Features of Secured Loans

Loans are given against the title of ownership of assets, which will be used as collateral (like homes, vehicles, assets, property).

Lower interest rates as compared to unsecured loans, because the bank has a higher level of confidence in your ability to repay.

More flexible repayment options than regular loans.

Option of fixed rate and variable rate.

Loan approval is faster.

Customizable loans to cater to specific needs.

These loans are available to non-salaried individuals.

There is no need for a guarantor for these types of loans.

Banks and lenders can repossess assets for which loans were taken.

Improves CIBIL score once secured loan has been repaid in full. More favourable than unsecured loans.

Eligibility Criteria

You must meet the following requirements to be eligible for a secured loan:

Applicants must have reached the age of 18 years or older.

Applicant must be a resident of India.

Secured loans can be availed by NRIs, NROs, NREs, as well as self-employed, professionals, business organisations. Farmers and HUFs can also apply for this type of loan.

Most banks and lenders require the applicant to have a minimum annual income of Rs.3 lakh per annum.

Income can be generated from regular salary, non-salaried income and business income.

For loans based on business income, the business must have been running and generating a profit for the last 3 years.

Applicant must have assets, whose value must match or exceed value of loan required.