Loan backed by collateral (property, deposits). Lower rates because the lender can seize the asset on default. Mortgages and car loans are secured.
A secured loan is backed by collateral — an asset the lender can seize if you default. Common examples: home loans (collateralised by the property), car loans (collateralised by the vehicle), securities-backed loans (collateralised by your stock portfolio).
Because the lender's downside is protected, secured loans charge materially lower interest rates than unsecured loans.
Home loans (HDB or bank): 2.6% – 4.5% interest, 25 – 30 year tenure. Collateral is the property itself.
Car loans (motor financing): 2.5% – 4% interest, 5 – 7 year tenure. Lender has a lien on the vehicle.
CPF Education Loan: subsidised; uses CPF OA as security.
Margin loans / portfolio leverage: brokerages lend against your stock holdings at SIBOR / SORA + a spread.
Cash-secured loans: deposit S$X with the bank, borrow against it. Used for credit-building.
Pros: lower interest rates (often half of unsecured equivalents), larger borrowing limits, longer tenures.
Cons: collateral at risk on default. Foreclosure, repossession, or forced sale of pledged securities are real consequences.
Personal liability: in Singapore, residential mortgages are usually 'recourse' — if the foreclosure sale doesn't cover the loan, you remain personally liable for the gap. Unlike some US states where 'non-recourse' walks are allowed.
Large, long-term financing where the asset itself justifies the loan (house, car).
Asset-backed financing for liquidity without selling: a margin loan against your stock portfolio can be cheaper than realising capital gains.
Credit-building with cash-secured loans: useful for foreigners new to Singapore building a local credit history.
Always model worst case: can you afford the loan if your income drops by 30%? Secured loans amplify both upside (leverage) and downside (forced sale).
A loan backed by collateral — an asset the lender can seize if you default. Common in Singapore: home loans (collateralised by the property), car loans (vehicle), CPF Education Loan (CPF OA), securities-backed margin loans (stock portfolio).
Lender downside is protected by the collateral. Lower default risk = lower interest rates. Singapore mortgages at 2.6% – 4.5% vs personal loans at 6% – 8% EIR — the gap reflects collateral protection.
The lender can seize and sell the collateral to recover what's owed. For mortgages, foreclosure and forced sale. Singapore mortgages are usually 'with recourse' — if the sale doesn't cover the loan, you remain personally liable for the gap.
Yes for large amounts and long tenures (housing, business assets). Use unsecured (credit cards, personal loans) only for short-term cash gaps you can repay within 12 months. Don't pile up multiple unsecured balances — MAS caps total unsecured exposure at 12× monthly income.