Secured vs. unsecured loans, and why you should take out credit protection insurance.

When it comes to borrowing from a financial institution you will usually have two options: Secured or unsecured loan. But what is the difference, exactly?

Secured Loan

Usually for big ticket items, like a house or a vehicle, a secured loan comes with the assurance that you will provide the lender with some form of collateral — something that has monetary value equivalent to or greater than the amount you’re borrowing (like a mortgage) and the collateral acts as security for the lender. This protects them from loss if you fail to repay the loan.

How a Secured Loan works

As long as you keep continuing to repay your loan according to your agreement with the bank, you’ll get to keep your collateral (and build your credit at the same time). When you pay off the loan, the collateral is yours.

As a secured loan ensures the lender walks away with something of value even if you don’t repay the loan, secured loans tend to generally be considered lower risk, leading you to be eligible for borrowing larger sums at lower rates and better terms.

Unsecured Loan

Unlike secured loans, an unsecured loan isn’t attached to any collateral. Therefore the only assurance the lender has that you will repay the debt is your creditworthiness and your word. Common types of unsecured loans include personal loans and credit cards, where you essentially borrow and repay monthly.

As with a secured loan, when you take out an unsecured loan you and the lender agree to certain terms for repayment, including an interest rate and how long you’ll have to pay back the debt. However, because there’s no collateral for lenders to claim if you default, unsecured loans are considered higher risk for lenders. However, there are consequences to defaulting on an unsecured loan.

Whenever you fail to repay a debt, it affects your credit. The lending institution can take legal action against you to recoup some or all of the debt. In addition, late payments that are reported impact your credit negatively and future potential lenders will likely see that as a red flag before extending you credit.

Need an unsecured loan? Credit Life Protection was designed to accommodate all banks in Seychelles lending unsecured loans, in case of death and Total and Permanent Disability.

Prior to disbursement from the bank, you contact us for insurance and pay a one off premium that will cover your entire duration of your loan. In the event of your disability, accidental death, dismemberment, and critical illness, your insurance will pay the remainder of your loan amount due to the bank.

Have a secured loan? We’ve got you!

We also provide a Mortgage Life Insurance Plan that is designed to help pay off your mortgage upon your passing during the period of the policy, saving your loved ones from worrying about debts and financial burdens that was initially not their own

Whatever your needs we are more than happy to assist. Simply call us on 429 5000, send an email to, or complete your details on our request a quote and an officer will get back to you. 

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