Getting personal loans is usually the first option of most people to fulfill the need for immediate cash to meet personal expenses. A personal loan can either be secured or unsecured, short term or long term. Unsecured loans does not require a collateral or security and usually incur higher interest, additional charges and are harder to acquire. A detailed evaluation of your credit rating history is expected in this type of loan. Unsecured personal loans are normally shorter in payment terms and are usually granted in maximum of five years unlike secured loans that can reach a term of twenty five years.
On the other hand, an application for a secured loan requires collateral or a security for the lender. With the presence of a security, a lender is willing to grant a personal loan with higher amounts at lower interest rates as compare to unsecured personal loans. One disadvantage of secured loans in the part of the borrower is that there is a risk that he might lose the asset that he used as collateral. This is probably the main reason why secured personal loans are less applied for than unsecured personal loans.