Personal loans are much preferred on account of their flexibility. There are two types of personal loans, secured personal loans and unsecured personal loans.
One of the most defining distinctions between different types of loans is the lender's Requirement of Security. Security is the collateral offered by the borrower to the bank/lender, to secure the loan he has applied for. If the loan is not repaid in timely fashion, the lender could seize the collateral to sell it for repayment of the loan. Top quality collateral not only reduces the lender's risk, but comes with a lower rate of interest on the loan. Borrowers with a history of poor credit would find it impossible to receive funding for a loan or mortgages without offering high quality collateral as security.
