There are two types of personal loans. One is secured personal loan and the other one is unsecured personal loan.
Unsecured personal loan have more risky for the lenders because there is no guarantee from the borrowers that they will return the loan amount to the lenders.
In case of secured loan lenders have the rights of the property of borrowers. If the borrowers are not ready to pay loan amount then lender can seize that property. So the lenders are safe about money that is why it is called secured personal loan.
So now question is what kind of property could be used to create a secured personal loan. One type of the property includes home, vehicle and land. Other type of property includes rights of saving account, fixed deposits, stock, or any valuable items.
So lenders goes with the better option and that is secured personal loan. Some times the secured personal loans are not that much secured because the price of the property varies with the time and that can be go down than the price of loan.
As we noticed that the secured loan is better option for the lenders, it is also the best option from the borrower’s point of views. As there is safety for the money of lenders the interest rate of the secured loan is less than the unsecured personal loan.
