Secured credit is backed by something you own, which the lender can recover under the loan agreement and the law if the loan is not repaid. Unsecured credit has no such backing and relies on your income and credit history.
Last reviewed on 19 October 2026.
Examples
- Secured: home loans, loans against property, car and two-wheeler loans (the vehicle is hypothecated), gold loans, loans against fixed deposits or securities.
- Unsecured: personal loans, most credit cards, consumer durable loans and many small business loans.
What usually differs
- Rate: secured loans often carry lower interest rates, because the lender's risk is lower.
- Amount and tenure: secured loans are often larger and longer.
- Paperwork: secured loans need documents and valuation of the security.
- What is at stake: with a secured loan you can lose the asset if you do not repay; with an unsecured loan the lender relies on recovery steps against you.
Important limitations
- Terms differ by lender and product; read the loan agreement and key fact statement.
- This guide is general information. It does not promise any change in your credit score, an approval or a particular result.
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