Banks and licensed moneylenders may offer either secured or unsecured. With a secured personal loan, there is a need to pledge for collateral or an asset such as in the form of a home or car. Lenders tend to offer a higher loanable amount and lower interest compared to an unsecured one. Take in mind that failure to repay allows the lending institution to seize your assets as repayment.

An unsecured personal loan is known as the most common type of personal loan. There is no collateral or guarantors involved. The higher risk involved is on the lender that is why this comes in a much higher interest rate compared to a secured loan.