Understanding The Pros And Cons Of Secured Loan (Updated)

Admin BFI
26 October 2020
Understanding The Pros And Cons Of Secured Loan (Updated)

A secured loan is often chosen when someone needs a large amount of fast funds and an urgent situation. The collateral are also vary, mainly house or car titles. Nowadays, many fintech companies offer secured loans products, both online and offline. However, apart from its simplicity, you must also understand this loan product well before you apply for secured loan . Here are the pros and cons of secured loans, as well as things that you should consider if you are sure to pledge your valuable assets.

1. Pros of Secured Loans

1.1 High Loan Limit 

One of the reasons why secured loan is oftenly chosen is because of the high loan limit. As you're putting collateral down with a high value, you will likely experience a low risk of financial loss. Due to the collateral, the financial institutions tend to reduce the risks if their customers fail to pay off the loan. Generally, the amount of loan limit offered can vary between IDR 2 million to IDR 2 billion.

1.2 Long Tenor

As you're putting collateral down , financial institutions that offer this service generally offer long payment tenors or deadlines. So, you can avoid the risk of bad credit. Generally, the tenor given ranges from a maximum of 5 to 10 years. 

1.3 Larger Amount of Funds

The amount of funds obtained is greater as the collateral value is large You can get a larger amount of loan funds compared to unsecured loans. Due to the large amount of funds, the secured loan borrower will be given some expanded financial options . For example, to develop a business or pursuing a higher level education.

2. Cons of Secured Loans

2.1 Risk of Losing Collateral 

Since the loan is secured on your home or vehicles, the lender can repossess them if you cannot keep up your repayments. Therefore, try to always be responsible with your loan and consider carefully before putting your collateral down.

2.2 Application Process Takes Longer Than Unsecured Loans

As getting a secured loan is a serious financial matter, it takes plenty of planning and preparation for your loan application to be approved. Financial institutions must carefully check whether the collateral you're putting down for the loan comply with the criteria and requirements. It is recommended to apply for a secured loan in advance as it takes some period of time to be approved. 

3. Considerations Of Applying For A Secured Loan

personal secured loan

3.1 Understanding All Of The Requirements

Make sure that you understand the features and terms of the loan product you choose. Understand the interest, tenor, and penalties that must be paid if you are late in paying loan installments. That way, you know the risks and features of the loan that you will receive.

3.2 Applying Loans Only When Needed

Before you apply for a secured loan, you can do a calculation to estimate the amount of funds that you will get and how long does it take for the bill installment. Make sure that you are able to repay the loan. Use the funds for something productive. For example, for the additional business capital. 

3.3 Choosing A Reliable Fintech Institution

Finally, make sure that you choose a trusted financial institution to secure your assets. Make sure to check whether the financial institution you are referring to has been registered with the Financial Services Authority, so that its credibility is guaranteed. Thus, if you intend to apply for a secured loan, don't hesitate to apply for a loan from a trusted financial institution and provide the best service for your needs. 

BFI Finance is a company that provides multi-purpose loans with collateral for motorbike bpkbcar bpkb, and house or shophouse certificates

Home Certificate

Low interest rates start from 0.6% per month and long loan tenors up until 7 years. See Terms

BPKB Motor

Get a loan with a fast process and a maximum tenor of up to 24 months. See Terms


Get a disbursement fund of up to 85% of the vehicle value and a tenor of up to 4 years. See Terms

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