The core difference between a secured and unsecured loan is collateral. A secured loan is backed by an asset — like a vehicle or home equity — that the lender can claim if you default, while an unsecured loan relies solely on your creditworthiness and income, with nothing pledged against it.
Secured Loan
- Backed by collateral like a vehicle or home equity
- Often qualifies for a lower interest rate
- Risk of losing the pledged asset if you default
- Typically allows for larger loan amounts
Unsecured Loan
- No collateral required
- Approval based on income and credit alone
- Faster application process, no asset appraisal needed
- Usually a higher rate to offset the lender's added risk
At a Glance
| Aspect | Secured Loan | Unsecured Loan |
|---|---|---|
| Collateral required | Yes | No |
| Typical rate | Lower | Higher |
| Risk if you default | Losing the pledged asset | Credit damage, collections |
| Approval speed | Slower — may require appraisal | Faster — most of our network's loans are unsecured |
The Verdict
Most personal loans in our network are unsecured, which means faster approval and no risk to a specific asset, in exchange for a somewhat higher rate. A secured loan can be worth considering for a larger amount if you have qualifying collateral and are comfortable with the added risk.