This article presents a comparison between the secured loans and the unsecured loans. There are stated the benefits and pitfalls of both the loans. It is very important to know the difference between the two. Depending upon the terms and conditions of particular lenders, the loans can be classified as secured and unsecured loans.

There are three factors on which the comparison is based. These are collateral, maturity period of loan, the amount that can be borrowed and the rate of interest. So, the comparison is as follows:

• Presence or Absence of collateral:

Secured loans require a borrower to pledge some collateral or asset as a      security deposit that may be used by the lender to get the loan amount back, in case the borrower is not able to repay. Unsecured loans do not require such collateral or any form of asset. These loans are given on the basis of credit worthiness of a person.

• Maturity Period, Amount Borrowed and Rate of Interest:

In security loans, due to the collateral, the lender feels safe and may give a higher loan amount at a low interest rate for a longer period of time. In case of unsecured loans, the loan amount is comparatively low, and the interest rate is high. The unsecured loans are available for a short part of time.

So, whenever you want a loan, you should look for these criteria and then decide which loan you want to opt for.