LoansFinancial Glossary
Secured Loan
Definition
A loan backed by an asset (collateral) that the lender can seize if the borrower defaults. Home loans (secured by property), car loans (secured by vehicle), gold loans (secured by gold), and loan against FD (secured by the deposit) are all secured loans. Secured loans offer lower interest rates than unsecured loans.
Why It Matters
The interest rate on a secured home loan (8-9%) is roughly half that of an unsecured personal loan (14-18%) because the lender's risk is dramatically lower. Whenever you need a large loan, explore secured options first. Even a loan against mutual funds (8-9%) is far cheaper than a personal loan.