Most personal loans in India are unsecured, meaning they don’t require collateral. However, lenders may ask for security if you have a low credit score, unstable income, or need a large loan amount.
At Today Finserv Consulting India, we help borrowers understand when collateral is necessary and how to get the best loan terms. Here’s a detailed guide.
Collateral Requirements for Personal Loans
1. Unsecured Personal Loans (No Collateral Needed)
✅ Common for salaried professionals
✅ Approval based on credit score & income
✅ Loan amounts typically up to ₹25-40 Lakhs
2. Secured Personal Loans (Collateral Required)
🔐 Required if:
- You need a higher loan amount (₹50 Lakhs+)
- Your credit score is low (<650)
- You’re self-employed with irregular income
Common Collateral Types:
- Property (home, land)
- Fixed Deposits (FD-backed loans)
- Gold (jewelry, coins)
- Insurance policies (LIC, etc.)
Pros & Cons of Collateral-Based Loans
| Factor | Unsecured Loan | Secured Loan |
|---|---|---|
| Collateral Needed? | ❌ No | ✅ Yes |
| Interest Rate | Higher (11-24%) | Lower (9-15%) |
| Loan Amount | Lower (Up to ₹40L) | Higher (₹50L+) |
| Approval Speed | Faster (1-3 days) | Slower (5-7 days) |
| Risk | No asset risk | Asset seizure if default |
How to Get a Personal Loan Without Collateral?
✔ Maintain a CIBIL score of 750+
✔ Show stable income (salaried/ITR for self-employed)
✔ Keep debt-to-income ratio <50%
✔ Apply with a co-applicant (if needed)
FAQs: Collateral for Personal Loans
1. Can I get a ₹10 Lakh personal loan without collateral?
✅ Yes, if you have a strong credit score (750+) and stable income.
2. Which banks offer unsecured personal loans?
🏦 HDFC, ICICI, SBI, Axis, and most NBFCs provide collateral-free loans.
3. Is gold better than property as collateral?
💎 Gold loans process faster, but property loans offer higher amounts.
4. Can I use a guarantor instead of collateral?
👥 Yes, some lenders accept a guarantor with good credit.
5. What happens if I default on a secured loan?
⚠️ The lender can auction your collateral to recover dues.
When Should You Opt for a Secured Loan?
- Need a large amount at lower interest
- Have low credit score but own assets
- Self-employed with variable income
