Secured vs. Unsecured Loans: Understanding the Differences
Secured and unsecured loans differ primarily in the collateral requirement. Secured loans are backed by assets like a home or car, providing lenders with security, often resulting in lower interest rates. Unsecured loans, on the other hand, don't require collateral but typically come with higher interest rates due to the increased risk for lenders. Understanding these differences is crucial for choosing the right type of loan based on your financial situation and needs.