Key takeaways
- Secured loans are backed by an asset.
- Unsecured loans rely on credit and income.
- Collateral can improve terms but adds risk.
Best for
Anyone comparing offers for the first time.
Secured
Backed by an asset like a car, home, or savings account. Lower lender risk can mean better terms, but the asset is at risk if you default.
Unsecured
Approved based on credit and income alone. No asset at risk, but requirements and pricing may be stricter.
Pros and cons
Advantages
- Secured: potentially better terms
- Unsecured: no asset at risk
Things to weigh
- Secured: collateral can be lost
- Unsecured: may cost more
Frequently asked questions
Which is easier to get?
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Secured loans can be easier to qualify for because the lender has collateral, but you risk that asset.
What counts as collateral?
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Common examples include homes, vehicles, savings accounts, equipment, and business receivables.
This guide is general educational information, not financial, legal, or tax advice. Terms, requirements, and availability vary by lender and your situation.