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What are the similarities and differences between a secured loan and an unsecured loan?

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Wiki User
July 27, 2011 4:56AM

The similarities are that both types of debts can be collected

according to the respective laws governing the transactions.

Secured debts are those in which some form of collateral has been

used. When someone buys a house, the house is used as collateral

for the loan. Lenders have much more leeway when collecting on

defaulted mortgages, such as foreclosure/forced sale. In the

instance of credit card debt, which is unsecured lawsuits have to

be filed, won, judgments executed, and so forth. Secured debts

always have to be paid or the property has to be forfeited.

Unsecured debts, even when a judgment is issued are not always


Answer :

Unsecured debt refers to any type of debt or general obligation

that is not collateral by a lien on specific assets of the borrower

in the case of a bankruptcy or liquidation or failure to meet the

terms for repayment.

Secured loan is a loan where you will be required to use your

property as security against the loan, so the lender is able to

balance the risk of lending to you.

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