Secured vs unsecured personal loans
Almost every personal loan advertised in India is unsecured. But you can also raise money against fixed deposits, gold, or securities. This guide explains when a secured route saves you real money and when the effort isn't worth it.
Last updated: 15 June 2025
The core difference
A secured loan is backed by an asset the bank can claim if you default. An unsecured loan is not. The bank's risk is lower on a secured loan, so it charges a lower interest rate.
Rate difference in India today
| Product | Typical rate (p.a.) | Approval speed |
|---|---|---|
| Unsecured personal loan | 10.5% – 24% | 1–5 days |
| Loan against FD | 1% – 2% above FD rate | Same day |
| Gold loan | 9% – 15% | Same day |
| Loan against securities | 9.5% – 11.5% | 1–2 days |
When secured makes sense
- You already own an asset you don't want to sell (FD, gold, mutual funds)
- You need a rate meaningfully below the personal-loan market
- You want a shorter approval window
- Your credit profile qualifies you only for high unsecured rates
When unsecured is fine
If your loan is small relative to your income, your credit score is strong, and you can repay in 1-3 years, an unsecured personal loan is usually the cleaner choice. You avoid tying up an asset and can pre-close without asset-release paperwork.