Secured loans are loans that require you to use some type of collateral in order to qualify for funds. In the event that you default on the loan, the lender can repossess the asset used to secure the loan to compensate for the unpaid loan funds. However, because the lender takes on less risk with a secured loan, it’ll likely charge lower interest rates.
Unsecured loans are loans that do not require any kind of collateral in order for you to qualify for funds. You’ll need a good credit score to qualify for an unsecured loan from many lenders, and interest rates may be higher.
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