Did you know that certain assets act as an instrument to help you meet your financial crisis? These assets include FDs, equities, bonds, real estate, etc. You can apply for a loan online against any financial instruments to fulfil your personal or business needs or apply for a loan to purchase land.

Let us understand the difference between secured and unsecured loans before going in-depth about the topic.

What is the difference between a Secured vs an Unsecured Loan?

Secured Loan: A secured loan is a loan offered by banks where you pledge an asset as a security or collateral for the loan. You can avail a loan corresponding to the value of your asset. If you fail to repay the loan, the bank seizes your collateral as payment.


Examples of assets used as collateral are Real estate, vehicles, stocks, mutual funds, insurance, precious metals, etc.


Unsecured Loan: An unsecured loan is a loan where you need not pledge any collateral. Since there is no collateral, the lenders have more risk in lending you the money. Therefore these loans have comparatively higher interest rates. This type of loan is primarily offered based on your credit score and repayment history to know your creditworthiness.


Examples of unsecured loans are personal loans, student loans and credit cards.



Top five financial assets

Here are the top five financial assets against which you can apply for a loan to meet your financial needs.

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Gold is a precious metal and is commonly used to take loans. You can avail yourself a maximum of 80 to 90% of the asset’s value, and the interest rate starts from 8%. The tenure of repayment ranges from 6 months to 24 months. Lenders accept the gold only if it is 18-22 carat.


Fixed Deposit (FD)

Taking a loan against a fixed deposit is considered a safe investment. You can avail yourself upto 90% of the value of the Fixed Deposit. The interest rate is 0.5% to 1% more than the interest on FD, and you can repay the loan amount as long as you hold the FD. Therefore, there is repayment tenure.


Mutual Funds and Shares

Lenders check for the mutual fund’s performance before lending you the money because it is considered a risky investment. The performance of a mutual fund depends on parameters such as market capitalization, stock price volatility and liquidity of the stock. The loan amount will also vary based on market volatility based on these parameters. Therefore, banks offer loans from 50 – 70% of the market value of shares with an interest rate of 10% per annum for three years.


PPF (Public Provident Fund)

You can use your PPF as collateral as it is backed by the Government of India and are free of tax with a high ROI. You can avail yourself of 25% of your total balance in your PPF account. The interest rate is 1% with a repayment period of 3 years.



You can use your property as collateral to get a loan for education expenses, business, etc. A maximum of upto 60-70% can be availed of the property’s market value. The interest rate is 9% per annum for 1 to 15 years. The main factor that lenders look for is your credit score above 700.

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In an emergency, taking a secured loan can be quite a hassle because of the lengthy process. Therefore, personal loans are the best option if you want instant funds. You can get an easy personal loan online without any collateral if you have a good credit history.


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