NISM Certifications · NISM-Series-X-A: Investment Adviser (Level 1) · Debt Management and Loans
In the context of personal debt management, which of the following is a secured loan?
A gold loan is a secured loan because the borrower pledges jewellery as collateral, which the lender can sell if the borrower defaults. Personal loans, credit card dues and loans given only on creditworthiness carry no collateral and are therefore unsecured.
- APersonal loan taken from a bank without any collateral
- BCredit card outstanding balance
- CGold loan taken against pledged jewelleryCorrect
- DEducation loan given purely on the borrower's credit standing with no collateral
Explanation
A secured loan is backed by collateral that the lender can sell on default. A gold loan is backed by pledged jewellery. Personal loans and credit card dues are unsecured, and the education loan described has no collateral, so it is unsecured too.
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