The main difference between secured and unsecured personal loan in Singapore is that a secured loan requires the borrower to surrender collateral to the lender while an unsecured loan does not. Collateral is something of value, such as a log book, title deed, or savings account. The collateral value should be equal to or more than the loan amount. So that if the borrower fails to repay the loan, they can sell the asset and recover their money or take the money into the savings account.

A secured loan is given based on the collateral provided. On the other hand, the unsecured loan is given on the basis of somebody’s income and expense behavior. Examples of secured loans are; mortgages, a loan taken to pay for a home, and vehicle loans, among others. Generally, they are huge loans.  Examples of unsecured personal loan in Singapore are student loans, credit cards, emergency loans, etc.

There are other differences between secured and unsecured loans. These will help you decide whether to take a secured or unsecured loan.

  1. Unsecured loans have higher interest rates compared to secured loans. This is because unsecured loans are risky to the lender. If borrowers default on payments, they have nothing to fall back on. Unlike secured loans where there is collateral.
  2. Secured loans have higher borrowing limits than an unsecured loan. This is because of collateral given for the secured loans. The lender has something of value to the borrower, and they can sell the asset to recover the loss in case of default. Therefore, they are not afraid to give the borrower as much money as they wish as long as the collateral is of equal or more value.
  • Secured loans have longer repayment terms compared to unsecured loans. When money lenders give an unsecured loan, they are anxious about defaulters. So, the sooner you repay the loan, the happier they are. As for the lender giving secured loans would be willing to give more time as they are not anxious. They have the collateral as security.
  1. In secured loans, there is the risk of losing collateral, while in unsecured loans, there is no risk of losing collateral because you have not given them any.

Does it mean you take secured loans because you have something that can act as collateral?  No! Because you might lose it if you face financial difficulties and fail to honor the payments agreement.


The secured and unsecured personal loans are suited for different purposes. You might need some money to pay school fees as a student, and you have no assets to present as collateral. In this case, you take an unsecured student loan. In another instance, you might need a small amount of money for an emergency. In such a case, there is no need to go through the long process of taking a secured loan.

The other side of the coin is that secured personal loans are best when you have collateral and require a huge amount of money.

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