Secured loans Vs Unsecured Loans: Which is a fast and easy loan option in Singapore?

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The concept of taking a loan in Singapore is rather straightforward. It simply means that you are borrowing a certain sum of money from a lender with specific terms and conditions outlined in a contractual agreement. Loans are generally divided into 2 broad categories – secured and unsecured.

Definition of a Secured Loan

Secured loans are simply loans given to a borrower against an asset. The asset is known as a “collateral” or “security” which is typically something of a high asset value for instance a property, car, expensive jewellery, antiques, or even rare art pieces. This collateral provides peace of mind to the lender. As a result, the lender has the right to seize your assets If you fail to repay the loan and eventually market the assets to recoup their losses. However, if in the event there is a shortfall after monetising your collateral, you would need to top up the difference. Hence, lenders are willing to offer higher personal loans with low-interest rates and better repayment terms.

Types of Secured Loans

Car Loan

When you take up a car loan, the car is used as collateral against the car loan. 

Mortgage Loan

Similarly, when you take up a mortgage loan, the property is used as collateral in the event of default repayments.

Definition of Unsecured Loan

As the name suggests, unsecured loans are not backed by any form of security or collateral. These are quick and easy loans to obtain when you need fast cash in Singapore. Since there is a higher risk factor for the lender, the interest rates tend to be higher and the loan amounts are smaller for unsecured loans. Default payments will have a negative impact on your credit scores for future loans as well. This will affect your creditworthiness for all other loan applications as well. 

There is no restriction on the utilisation of an unsecured loan. You can basically use it for any purpose. One exception to this is a home renovation loan. Even though you don’t need collateral for this loan, you need to comply with certain rules on what you can use the funds for. The rule of thumb is that the renovation loan can only be utilised strictly for home renovation works only and not for the purchase of furniture and fittings.

Types of Unsecured Loans

Debt Consolidation Loan

It’s basically a debt refinancing method that involves taking out one loan to pay off all outstanding loans. This plan allows the borrower to concentrate on paying off just one single loan without worrying about various interest rates on all outstanding loans. It is the best solution for borrowers who have several outstanding loans as it is a quick cash loan option.

Personal Loan

Most of the time they are unsecured loans that are offered in small loan amounts, coupled with high-interest rates. Examples are wedding loans, Grab/Gojek loans, and payday loans. Most people opt for this loan as it is a quick, easy, and fast cash option that can be used for most purposes.

Credit Card Loan

This is the money that you borrow when you use your credit card to make a purchase. The bank loans you the money upfront and charges you interest if you do not pay within the stipulated time frame.

It is vital to understand the consequences of both types of loans before making a decision. Both secured and unsecured loans have their own advantages and disadvantages. It is important to understand and analyse your current financial situation before taking up either type of loan.

Keep in mind that for secured loans, you might end up losing your collateral if you are unable to service your monthly repayments. Will you be able to deal with it when that happens as you might even need to top up any shortfall in the outstanding loan amount?

As for unsecured loans, there is the issue of affordability of footing the higher interest rates on the loan amount. Your credit history will be adversely affected if you default on your loan payments. Future loan applications will be impacted as well.

In summary, the best solution for a quick cash loan in Singapore is an unsecured loan. Call Soon Seng Credit today for a personal discussion for all your loan needs today. We offer low-interest rates and flexible repayment schemes catered for all your personal and financial needs.


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