In order to meet the needs, various businesses and individuals take loans. Apart fromt this, in order to run or start the business or finance a trade, banks issue various kinds of loans. Whatever the form of loan, it is broadly classified into Secured and Unsecured Loan.
| Secured Loan | Unsecured Loan |
| 1. it is issued by taking lien on assets. 2. it is common where creditworthiness of the borrower is in question. 3. it carries a lower rate of interest on the loan amount. 4. risk of losing the money lended is low. 5. it is assumed to be a cheaper means of borrowing. 6. this type of loans are usually taken for a longer period of time. 7. the lender can forfeit the asset of the borrower in case he or she defaults. | 1. its is issued without taking any lien or charge on the assets. 2. it is common where creditworthiness of the borrower is very strong. 3. it carries a higer rate of interest on the loan or borrowed amount. 4. risk of losing the money lended is very high. 5. it is assumed to be a expensive means of borrowing money. 6. this type of loans are usually taken for a short period of time. 7. the lender can sue the borrower in case he or she defaults. |