Personal Loan

Do You Need To Mortgage An Asset To Take A Personal Loan?


Personal loans are very dynamic. You can use an instant personal loan to consolidate your debt, pay off medical bills, or pay for home repairs, among other things. So, these types of loans become the top choice for people looking for instant cash.

Some instant personal loans may be secured by collateral, but most of them are not. You can use your savings account balance, car, or house as collateral for an instant personal loan. Read on to find out what collateral is and what you can and cannot use as collateral for a secured personal loan.

What is a Personal Loan?

A personal loan is one of the easiest ways to borrow money for a short time. With a personal loan, you can avoid asking family and friends for money, which can be embarrassing. The best feature of a personal loan is its flexible usage. The lender does not put any restrictions on the end use of loan money. You can use it to pay for a range of expenses like a luxury trip or an urgent medical bill.

Some people borrow money from individual creditors or get credit with their credit cards. But they come with much higher interest rates, so you end up paying more in interest.

If you want to borrow money but do not own any assets or do not want to put your gold jewellery or house up as collateral, a personal loan is the way to go.

Until a few years ago, getting a personal loan took a lot of time. However, this has changed with online applications. Now, you can get yourself an instant personal loan within hours of applying. The application process also takes only a few minutes.

What Does Collateral Mean?

Collateral is an asset, like a car or house, that a borrower gives up to get a loan. You can still use the car or house during the loan tenure. The lender only holds the documents for the asset. When you get an instant personal loan with collateral, the lender usually puts a lien on the collateral. If you do not repay the loan, the lien gives the lender the right to take your property. When you repay the loan, the lender takes the lien off your property.

If you do not repay the loan, the lender can sell the asset to make up for the money they lose. A lender’s financial stake is protected by collateral. This makes them more likely to give a loan.

If you default, you not only lose your asset but also greatly damage your credit score. An unpaid debt also negatively affects your credit score for seven years after the default has occurred.

In general, the interest rate and loan tenure for secured loans are more favourable than those for unsecured loans. 

Can I Get a Personal Loan without Collateral?

Yes, you can. Borrowers need not put up any property or security for an unsecured personal loan. Lenders of unsecured loans want to know that they can count on you for paying their money back. So, they evaluate your application based on your credit scores, credit reports, income, and other criteria. Personal loans have the same effects on your credit as secured loans. But if you do not pay them back, you do not lose your property.

Pros of Unsecured Personal Loans 

  1. Special Offers for New BorrowersWhen you apply for a personal loan, you can get a better interest rate, a lower processing charge, and other perks.
  2. Quick Approval These days, fintech companies and banks offer pre-approved loans to customers with good credit who maintain a good account balance.
  3. High Loan AmountsMany NBFCs give high loan amounts even for unsecured personal loans. For example, some lenders might let you borrow up to 25 lacs for personal use.
  4. No Collateral You do not put up any assets for collateral for unsecured personal loans. This ensures that if you fail to repay the loan, you do not lose your assets.
  5. Best for Low-Limit Credit Card HoldersIf your credit card has a low credit threshold, a personal loan is a good way to meet your monetary needs.
  6. Long Repayment TenureYou can repay the loan amount in 12 to 60 months. Some lenders even allow for a 5-year loan tenure.

Cons of Unsecured Personal Loans 

  1. Strict Eligibility CriteriaBanks have a lot of rules about who can get an unsecured personal loan. They look for people with better credit, a higher minimum monthly income, and jobs with well-known organisations.
  2. Time-Consuming It may take lenders between 3 and 5 days to process an application for an unsecured loan. This is because unsecured personal loans require a thorough background check of the applicant. This helps the lender assure that the applicant can repay the loan amount in full and on time.
  3. Rigid Repayment StructureMany lenders have strict rules about the repayment of personal loans. These include charges for paying off the loan early, penalties for failing to make payments on time, etc.


Unsecured instant personal loans are a type of loan that does not have to be backed up by anything. Lenders give money to people based on how likely they are to pay it back, even if they do not have a mortgage or other security. So, a personal loan is the simplest way to get a loan if you do not have any personal property to put up as collateral or if you do not want to do so. 

You can read more about instant personal loans at Piramal Finance. Also, while there, look into their other financial products and services. You will many solutions for your fiscal needs.