A secured loan requires collateral such as property, vehicle, or fixed deposits.

Since risk is lower for lenders, interest rates are generally lower.

Unsecured loans do not require collateral.

Approval depends heavily on credit score and income stability.

Secured loans usually offer lower interest rates.

Unsecured loans often have higher rates due to higher lender risk.

In secured loans, failure to repay may result in asset seizure.

In unsecured loans, legal action may follow but no asset is pledged initially.

Choose secured loans for large amounts and long tenure needs.

Choose unsecured loans for short-term needs without risking assets.

Understanding loan structure helps borrowers make financially safer decisions.

Q1. Does prepayment reduce total interest?

Yes, prepayment reduces the principal amount and lowers overall interest cost.

Q2. Is foreclosure good for credit score?

Timely foreclosure generally reflects responsible repayment behavior.

Q3. Can high DTI affect loan approval?

Yes, high DTI may reduce eligibility or increase interest rate.