Types of Personal Loans in India: Secured, Unsecured, and Everything in Between

Understanding the different types of personal loans—secured, unsecured, and more—can help you choose the right borrowing option for your needs

Personal loans have become one of the most popular financial products in India. Whether it’s managing medical expenses, funding education, consolidating debts, or handling emergencies, personal loans offer quick access to funds. But not all personal loans are the same. They can broadly be categorized as secured and unsecured, with some variations in between.

Here’s a complete guide to understanding the different types of personal loans in India.

What is a Secured Personal Loan?

A secured personal loan is backed by collateral, such as property, gold, fixed deposits, or other valuable assets. Since the lender has a guarantee, these loans usually come with

• Lower interest rates

• Higher loan amounts

• Flexible repayment terms

Example: Loans against property, gold loans, or loans against fixed deposits.

Best suited for: Individuals who have assets to pledge and want higher loan amounts at lower rates.

What is an Unsecured Personal Loan?

An unsecured personal loan does not require collateral. Instead, approval depends on your income, credit history, and repayment capacity. Because there’s no security involved, lenders consider it riskier and may charge

• Higher interest rates

• Shorter repayment periods

• Strict eligibility criteria (like minimum credit score or income level)

Example: Standard personal loans for medical needs, weddings, or travel.

Best suited for: Salaried or self-employed individuals without collateral but with a steady income.

What Are Partially Secured Loans?

Falling between secured and unsecured, partially secured loans involve pledging lower-value collateral or combining collateral with income-based assessment. For example, a borrower might provide gold or fixed deposits to reduce risk for the lender, but the loan approval still also considers their salary or business income.

Best suited for: Those who want to improve loan eligibility or get better terms without pledging large assets.

Specialized Types of Personal Loans in India

Apart from secured and unsecured loans, lenders in India also offer personal loans tailored to specific needs:

1. Debt Consolidation Loan – Combine multiple loans into one with a single EMI.

2. Wedding Loan – For marriage-related expenses like venues, décor, and catering.

3. Medical Loan – Quick funding for surgeries, emergencies, or healthcare needs.

4. Education Loan (Personal) – For courses, tuition fees, or skill development programs.

5. Travel Loan – To cover domestic or international travel expenses.

Key Differences Between Secured and Unsecured Loans

Feature	Secured Loan	Unsecured Loan
Collateral	Required (property, gold)	Not required
Interest Rate	Lower	Higher
Loan Amount	Higher	Moderate
Risk for Lender	Lower	Higher
Approval Speed	Slower (needs valuation)	Faster

Final Thoughts

Whether you opt for a secured, unsecured, or partially secured personal loan depends on your financial situation, assets, and urgency of funds. If you have collateral, secured loans can save you money with lower interest rates. If not, unsecured loans provide quick and convenient access to credit.

At One Day Finance, we help you choose the right loan option for your needs—be it personal loans, debt consolidation, or overdraft facilities.

Need guidance? Get in touch with One Day Finance today for expert loan assistance.