Secured loan is a loan in which lender ask for some guarantee from borrowers in terms of assets like your house, car, stocks, bonds, etc.
This means if you fail to pay the amount of loan, then bank can recover their debt by selling your asset.
While, unsecured loan is a loan in which no guarantee is required to obtain finance.
Lenders cannot recover their money in case of failure of repayment. It is much riskier for lenders, but they compensate by taking high interest rates.
Both types of loans are having advantages and disadvantages, but as per my perspective secured loans are far better than unsecured loans if you are planning to have large investment. The reason behind it is that other than the risk of losing valuable assets in case of secured loans, all rest aspects are very beneficial. Secured loans are offered at very low interest rates. Also one can borrow high amount and that too for long period that is around 30 years in case of secured loan, which is exactly opposite in unsecured loan, where loan is extended only up to 1 to 5 years that too with very high interest rates. So, it is wise to go for lower interest rates if you are sure of constant cash flows.
Though secured loan is backed by some asset, unsecured loan is approved only after thorough analysis of borrower’s financial stability that is whether they will be able to repay the loan amount or not. Thus, if you are not earning enough and have bad past repayment history, then your loan application may get canceled, while secured loan can be procured by any people, who have asset for collateral to put against loan amount, there is no need of credit worthiness. Also there are numbers of ways in which secured loan payment can be repaid, which again makes secured loan more suitable.
Thus, though I believe that secured loans are better than unsecured loan, but the final conclusion depends on individual’s perspective and the purpose of taking loan. It is you who can decide which will be better option for you by analyzing your cash flow, credit, risk, interest rate, purpose and many more associated factors.