Secured Personal Loan


A personal loan is a loan which you can take for any personal reason that you don’t have to disclose to the bank. A secured personal loan is a loan which is provided by the banks against security or collateral. Collateral or security is the property or any other financial assets you provide to loan provider as a guarantee that in case you couldn’t repay their loan than they can use that asset to recover their money loaned to you. The assets accepted by banks are mainly; legal property, gold, insurance policies (SBI/LIC), fixed deposits, shares/mutual funds, public provident fund. A secured personal loan can be obtained against any of the assets mentioned above. The asset against which the loan is provided should be legally in the name of the loan borrower only then the loan can be approved.

While providing secured personal loan two things are mainly taken into consideration; the asset provided by the loan borrower and the credit history of loan borrower. In India, credit history is determined by CIBIL. Credit history is the record of a person’s prior loan status and his income status. When credit history of a person is said to be good this means that he has paid all his loans well in time without any of instalments not paid or delayed, and when it is said to be bad it means that he has not repaid his loan properly or is a defaulter. People with a good credit history will get the secured personal loan easily with much paperwork whereas a person with bad credit history will have to go through a long process but a secured personal loan is the best way for the person with bad credit history to get a personal loan.

The amount of loan a person can get through a secured personal loan is determined by his income status, the asset he is providing and his credit history. A person with a low and unstable income will get a lesser loan amount as compared with a person with higher and stable income having the same asset. Value of asset provided for the loan is also a major factor in the deciding of the amount of loan provided to the borrower.

Important documents required for an unsecured personal loan are: –

  • Valid documents related to the asset provided for the loan
  • Asset-related legal Affidavit
  • Valid identity proof.
  • Valid residence proof.
  • Valid age proof.
  • Valid signature proof.
  • Valid Income proof.
  • Post-dated cheques (pdc).
  • Loan Application letter with recent photographs.
  • Valid business continuity proof (I.T. returns or bank certificates).
  • Guarantors and the same set of their documents.

Important eligibility criteria for an unsecured personal loan are: –

  • Age of the person should not be less than 21 years and on the date of maturity of loan, his age should not be more than 60 years.
  • Asset provided should be from the list of the concerned bank or financial institute.
  • Asset provided for the loan should be legally in the name of the loan borrower.


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