A secured loan is supported by specified assets under the agreement. Those assets may be at risk if the borrower does not meet the agreed obligations.

An unsecured loan does not rely on the same asset security, but may still involve personal guarantees or other commitments. Unsecured does not mean that repayment is optional or without consequences.

Compare the complete terms rather than choosing by label. Cost, repayment capacity, guarantees and the practical implications of default all matter.

Key takeaways

  • A secured loan is supported by specified assets under the agreement.
  • An unsecured loan does not rely on the same asset security, but may still involve personal guarantees or other commitments.
  • Compare the complete terms rather than choosing by label.