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The loan which is forwarded by bank only against the creditworthiness of borrower is known as ‘unsecured’ loan. Such loans are also known as
—signature loans and personal loans. If the loan is supported by some form of collateral (of secondary type, such as land, building, etc.), then it is ‘secured’ loan.
Basically, loans are provided by banks against two kinds of securities—the creditwothiness of the borrower (known as the ‘primary security’) and collateral (known as the ‘secondary security’).