Secured Loans: How They Work, Benefits, Risks, and Key Considerations

• A secured loan requires pledging an asset (like property, vehicle, or cash) as collateral, reducing lender risk.
• These loans typically offer lower interest rates and higher loan amounts compared to unsecured loans, even with a weaker credit score.
• Types include mortgage, vehicle loan, loan against property, gold loan, and secured credit cards, catering to various needs.
• Application involves KYC, income proof, and asset documentation; eligibility includes Indian residency, age 18+, and sufficient annual income.
• While offering advantages like tax benefits and flexibility, the main disadvantage is the risk of losing the pledged asset if repayments are defaulted.

Why It Matters: Secured loans offer lower interest rates and higher amounts by pledging assets, but carry the risk of asset loss upon default.