Secured Funding Overview
In this growing world, financial resources have become a necessity for individuals and businesses alike. Whether it’s to cover personal expenses or meet the financial requirements of a company, securing funds is crucial. However, many individuals and businesses may find themselves lacking personal funds or savings to fulfil these needs. This is where the concept of secured funding or financing comes into play.
If we talk about a business, the need for finance can be for expansion, reconstruction or to pay the dues. At this moment the thought of funding comes into the picture. Now the funding can take two types, that are secured funding and unsecured funding.
What does the term Secured Funding refer to?
Secured funding (unlike unsecured funding) is a type of loan where the borrower has to keep collateral of assets or security against the loan. In case of default, the lender has the right to put the asset or security pledged on auction and recover the amount from it. The borrower here does not have personal liability for the loan.
The tenure of loans offered in secured loans is high with a low Rate of interest. Thus, we at Terkar Capital make an easy process of securing finances for our clients. Our team of experts analyzes each aspect properly and works accordingly.
Features
- The interest rates in secured funding are lower than in unsecured funding due to the presence of collateral.
- Client credit is not a compulsory criterion. Here, banks may or may not ask for a CIBIL score. In the case of secured funding, the borrower gets a loan even if its CIBIL score is less.
- The tenure of the loan can be both fixed and variable. The borrower has the option to extend the tenure of the loan.
- In case of default, the lender can recover the amount from the mortgaged asset.
Disadvantage
- If the borrower even after the tenure of the loan is unable to pay off his loan amount, his CIBIL score is affected. However, this will also influence his future loans.
- In case of default, lenders’ companies will seize the asset. An auction will be conducted to recover the amount. So, the borrower will lose its assets, which may affect its business directly or indirectly.
- The procedure or time required for a loan is lengthy as the lender has to inspect many things right from assets information to borrowers’ business, etc. Heavy paperwork is another disadvantage of secured loans.
Who can apply for Secured Financing?
Businesses or corporates that have fixed assets and need money for expansion, reconstruction, undertaking new ventures, or paying dues can apply for secured funding.
Eligibility
- The applicant should be a Resident of India.
- The age of the applicant should be between 18 to 60.
- The applicant should possess a fixed asset.
- Many times there are income-based eligibility criteria for loans but there are no such fixed structure criteria, it varies.
- The companies have to provide certain income statements or financial statements as per the requirement of the lender.
Check out your CIBIL for free, Here.
Why Terkar Capital?
Terkar Capital is a financial services company in India, that offers hassle-free secured and unsecured business loans. Our company stands as a pinnacle of modernization and specialization in loan facilitation, prioritizing a deep understanding of borrowers’ needs, strengths, and weaknesses.
Our dedicated team tirelessly strives to provide top-notch services tailored to your requirements. Whether you seek secured business loans to raise funds or tackle various business situations, Terkar Capital is your go-to solution.
FAQs
How does secured funding differ from unsecured funding?
Secured funding demands collateral or assets as security for the loan, whereas unsecured funding operates without any collateral involvement. The presence of collateral security in secured funding generally results in lower interest rates.
How does secured funding affect the borrower's CIBIL score?
Failure to repay a secured loan beyond its tenure negatively impacts a borrower’s CIBIL score. This adverse effect on their credit score can have long-term financial implications, potentially hindering their eligibility for future loans.
What are the advantages of secured funding?
It offers a lower rate of interest, may not strictly require a high credit score, and provides flexibility in choosing fixed or variable loan tenure.
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