Secured Loans vs Unsecured Loans - Explained in Hindi - YouTube

Subscribe Asset Yogi channel and hit the bell icon.

Be the first to watch the latest finance videos.

MUSIC

Namaskar, my name is Mukul, and welcome to asset Yogi.

Where we unlock finance knowledge.

In today's video, we are going to talk about Secured Loans and Unsecured Loans.

You must be aware that the interest rate of a secured loan is slightly less.

And the interest rate of unsecured loans is high.

But why do banks charge you higher interest rates on unsecured loans?

Both the loans are associated with some risks

What are the advantages and disadvantages of both

In this video, we will know all these differences in detail

So stay tuned till the end.

so that when you go to get a loan

So that you can make a fair decision.

and you know well

whether you should take a secured loan and unsecured loan

Let's go straight to the blackboard.

So first, let's understand what unsecured loans and secured loans are

If we talk about secured loans

So the secured loan is backed from the assets.

This means the security of something is given.

Something is mortgaged.

When a secured loan is given

There is no collateral in case of an unsecured loan.

There is no security of any kind.

That's why it is called an unsecured loan.

For examples

In a home loan, you mortgage a house or any property under Loan Against Property

In a car loan, you have to mortgage the car.

In a gold loan, you mortgage the gold.

You also get a business loan against machinery

Or with any inventory of your business

Any kinds of goods,

Or your maintained raw materials.

Against that, you get the loan.

If the loan defaults in the secured loan

So the bank can recover the loan by selling your assets.

That's why it is called a secured loan.

If we talk about unsecured loans and see examples.

So personal loan is an unsecured loan

Education loan is also unsecured.

Credit card debt is also an unsecured loan.

If you take a bank overdraft, then that too is a type of unsecured loan.

In business also you can get an unsecured loan for working capital management

So why do banks charge you higher interest rates for unsecured loans?

Let's understand it

The risk of default is less in the case of secured loans.

You do not want your asset to be auctioned or to be sold.

Because you get a loan less than the value of your asset

For example, you have taken a home loan of ₹80,00,000.

So your property value will be ₹1 Crore

So you would not want to lose your property worth rupees one crore.

That's why maximum people make full payment of the secured loan.

Secured loan default cases are very rare

Unsecured loans have high default cases

So the risk of the bank increases.

So it is simple if the risk will increase.

higher the risk, higher the interest rate.

it's a simple logic

If there are more defaults then the bank will think

to divide the default amount between the customers of that profile

So for this reason the bank increases the interest rate.

If the risk is low, the interest rate will also be low.

That's why the secured loan interest rate is always low

And the interest rate of unsecured loans is very high

For example, suppose you take a home loan of 8%.

So you will get a loan against property up to 9% to 9.5%.

But on the other hand, if we talk about personal loan

So you will get it from 13% to 14%.

There is a huge difference if we talk about unsecured loans.

Similarly, credit card debt is too much.

It could be 20%

One year's charges range from 20% to 30%.

Because they charge 2 to 2.5% every month.

If you have any default

So we discussed risk and interest rate.

Now let's discuss that

Suppose you default the loan, so what will happen in that case

The bank will recover its dues.

Loan + interest rate

All the outstanding loans till that time.

Plus due interest rate of the bank till the time

The bank will recover all the dues till that time by selling your asset.

In the case of the unsecured loan if the loan defaults

So the bank does not have any such item by selling which it can recover the amount.

So the bank has to write off this kind of loan under compulsion.

But what is the risk to you as a borrower?

If you default on the loan, you are also at risk.

your credit score goes down if you default on any loan.

whether you default any payment of credit card Or you default the education loan.

Or personal loan

If you default on any kind of loan, then your credit score becomes very bad.

In India, we know it as Cibil Score.

CIBIL score is a very popular score.

It is out of 900.

I have talked about this in many videos before.

750 plus is considered a good score

If you default on any loan, your score can fall below 700 or even 600

It may take a long time to increase the CIBIL score back

You have to pay the loan you have taken

So it's better that you do not default on any loan.

Because in future you may need a loan.

If your credit score is bad then you will never get the loan.

You also won't get credit cards easily

Now let's discuss its process and documents.

The processing time of a secured loan is a bit consuming.

This requires more documentation.

A complete profile study of the customer is done.

And its risk profile study is done.

That's why approval takes a little longer.

But the unsecured loan is very fast and instant.

It does not require much paperwork.

Suppose you already have a credit card

So on its basis, you can get a personal loan and credit card loan very easily.

It depends on your CIBIL score.

If you have a good credit history.

So you can get a personal loan, an education loan, or credit card debt very easily.

Now it comes to which cases you should take a secured loan?

So firstly if you want to take a loan for long term

Let's say if you are buying a house you should take a home loan.

If you want to take a loan for your business then Loan Against Property is a good option.

if you do not get a home loan then

A home loan is the best loan if you want to buy a house

Because a home loan is the cheapest you should always take a home loan in that case

And you should take a secured loan in a higher amount also.

It's a simple reason is that your interest rate is low

If you want to take a bigger amount so you don't want to pay high-interest rates

If you want to take a large amount loan for a long time.

So in that case you should take a secured loan

You can prefer an unsecured loan for the short term.

You should not prefer this, you should take this loan in emergency only.

If you have the option that you can take a secured loan

So always take a secured loan whether it is short-term or long-term.

Because if you get instant approval, in that case, you can take an unsecured loan

Take an unsecured loan for a small amount

Because you don't want to pay a high-interest rate.

So in an emergency or for short term

And if you want to take a loan of a lesser amount, then you can take an unsecured loan.

Apart from this, a top-up loan is also a good option.

Suppose you have taken a home loan so after that also you can take a top-up loan.

And you can use it for any purpose

I made a very detailed video on this.

What are the eligibility requirements for a top-up loan?

and how to get a loan, I explained the whole concept in detail.

So you can watch my video.

In this video, I have covered all major points related to secured loans and unsecured loans.

So I think if you want to take any decision in future

whether you have to take a secured loan or an unsecured loan

So I think video will be helpful for you

So that's all for this video.

I enjoyed making this video

If you like this video then please like and share this video

If you have any suggestions or want to suggest topics for future videos

Or if you want to share your thoughts with the community.

you can comment below

And if you haven't subscribed to this channel yet, then subscribe

and press the bell icon on your phone.

So that you will get notification of my latest videos

Because every day I keep bringing such informative videos

related to finance and investment

So see you in the next video

Till then keep learning, keep earning, and stay happy.