What is the difference between a secured and an unsecured personal loan?

A secured loan uses your home as collateral or security for the lender, so the lender is very confident that he will be repaid. The lender gains an interest in your property and has the right to repossess it in the event of loan default. For this reason, secured loans are normally available even to people with adverse credit history, provided there is sufficient equity available in their properties. Lenders may also be relaxed about missed payments as they know that they have the legal right to recover the full amount of the debt. The advantage to the borrower is that the interest rate is normally lower than for unsecured loans but you risk losing your home if you cannot afford to keep up repayments. An unsecured loan carries less risk to the borrower due to the fact that his/her home is not used as collateral or security for the lender. Borrowers will not normally lose their homes if they cannot afford to keep up repayments. When applying for an unsecured loan, most large lenders ...  more