All loans are either secured or unsecured.

Secured loans are tied to collateral assets, such as a car or a home. With a secured loan, you are leveraging your personal property to obtain the funds. Generally, the higher the value of the property, the larger the loan, but lenders will also consider your credit history. If you default on making payments on a secured loan, then the lender can take possession of your property.

Examples of secured loans include:

• Mortgages
• Auto loans
• Savings accounts
• CDs

Unsecured loans are not tied to personal property. If you default on payments for an unsecured loan, the lender is not able to automatically take possession of
your property.

Examples of unsecured loans include:

• Student loans
• Credit cards
• Personal loans