SECURED LOAN
Unlock Your Financial Potential with Our Secured Loans – Your Future, Your Security!
What is a secured loan?
A secured loan is a financial product designed to provide borrowers with access to funds while offering a layer of security for both the lender and the borrower. Unlike unsecured loans, which rely solely on a borrower’s creditworthiness, secured loans require collateral, such as a home, car, or other valuable assets, to back the loan. This collateral acts as a guarantee that the borrower will repay the loan as agreed. If the borrower defaults on the loan, the lender may take possession of the collateral and sell it to recover their losses. It often come with lower interest rates and more favorable terms, making them an attractive option for individuals looking to finance major expenses like Home renovations, debt relief, or even opening a new business. With a secured loan, borrowers can access the capital they need with added peace of mind, knowing that their assets are safeguarded throughout the repayment process.
Why use a Secured loan?
- Greater borrowing capacity for significant business needs
- Opportunity to retain ownership and control of the business while accessing funds
- Option to use different types of assets as collateral, providing flexibility
- Potential tax benefits of interest payments
- Opportunity to consolidate multiple debts into a single manageable loan
- Potential for improved business credit profile and creditworthiness
Secured Loan Benefits And Features
instant loan
approval
Flexible
collateral
Diverse assets are accepted as security
cash
flow
Improves financial strength
Lower borrowing
costs
Reduced loan expenses
Asset Required as Collateral
The loan can be up to 85% of the value of the property
Lower interest
rates
In comparison to unsecured loans, secured loans often have lower interest rate
Higher loan
amount
Lenders willingly provide large loan amounts as collateral to reduce their risk exposure
Credit
worthiness
Lenders examine the borrower’s credit history, financial statements, etc. to determine eligibility and loan terms
Eligibility and Documents required for Secured Loan
- Eligibility
- Indian Resident
- Available for both Salaried and Self- employed
- The age limit for applicants is 18–70 years
- Individuals, Startup, MSMEs, and SMEs are eligible
- The credit score should be 700 or higher
- The applicant should have a good financial history
- We cover residential properties, commercial/mixed-use properties, and industrial built-ups.
- Documents
- Salaried Individuals
- Proof of Identity: PAN card, Aadhaar card, Voter ID
- Proof of Address: Telephone bill, Electricity bill
- Proof of Age: PAN card, Passport
- Income Proof: Salary slips for the last 3 months, Bank statement for the Last 6 months, Last 2-year ITR
- Businesses
- Proof of Existence Business (Udyam): Partnership Deed and Certificate of Incorporation
- Business Address Proof: Electricity bill, Lease agreement and GST Registration certificate
- Ownership Proof of Collateral: Property deeds or Registration documents
- Income Proof: Income tax return of last 2 Years; Bank statement for the past 6 months
- Business Plan: A detailed business plan outlining the purpose of the loan and how it will be utilized
Note: This is an indicative list that may vary depending on your unique loan application.
Advantages of Secured Loan
- Lower Interest Rates: Secured loans typically come with lower interest rates compared to unsecured loans because lenders have collateral to mitigate their risk.
- Higher Loan Amounts: Due to the collateral, borrowers can often access larger loan amounts, making secured loans suitable for significant expenses like home renovations or buying a car.
- Easier Approval: Secured loans are easier to qualify for, even if you have a lower credit score, as the collateral reduces the lender's risk.
- Extended Repayment Terms: Borrowers may have the option to extend the repayment period, resulting in lower monthly payments.
- Improved Credit: Successfully managing a secured loan can positively impact your credit score by demonstrating responsible borrowing behaviour.
- Tax Benefits: In some cases, the interest paid on a secured loan, such as a mortgage, may be tax-deductible.
Disadvantages of Secured Loan
- Risk of Collateral Loss: If you default on the loan, the lender can seize the collateral, which could be your home, car, or other valuable assets.
- Complex Application Process: Secured loans often involve a more complex application process, including property appraisals and legal documentation.
- Higher Total Cost: While interest rates may be lower, the total cost of a secured loan can be higher due to the extended repayment period.
- Limited Asset Use: The asset used as collateral is tied up until the loan is paid off, limiting your ability to sell or use it for other purposes.
- Potential Overborrowing: The availability of larger loan amounts can tempt borrowers into taking on more debt than they can handle.
- Credit Score Impact: Defaulting on a secured loan can severely damage your credit score and make it challenging to obtain credit in the future.
Frequently Asked Questions
Financial institutions offer different interest rates depending on the applicant's credit history, ability to repay the loan, cash flow, business needs, etc.
Land, residential or commercial property, equipment, stock, raw materials, machinery, and gold are some examples of collateral.
Low CIBIL makes it challenging to obtain a loan, although some lenders may provide secured loans that demand collateral, improving the possibility of approval despite low CIBIL.
Various banks and NBFCs have different interest rates for secured business loans. For Secured business loans, Secure Finance offers an interest rate starting at 11.90% p.a.
70% to 90% of the value of the collateral is usually offered as a loan by banks. That may change based on additional eligibility criteria and the particular conditions stated in the loan collateral.
Many banks and NBFCs limit secured business loans to a maximum 10-year payback period. Repayment terms of 12 years are allowed through Secure Finance.
Yes, you can use a secured business loan to start a new business. However, because you won't have a track record of financial performance, lenders may require more collateral or charge a higher interest rate to offset the risk
The EMI calculator is the most effective tool for planning for a business loan. This online tool gives you an advantage when making loan planning decisions that help accurately calculate Business Loan EMI amounts.