There are 2 types of personal loans – secured loan and unsecured loan. Next, an alternative loan is a cash-secured loan or “reverse loan”.
An unsecured loan is a loan that does not require any collateral or assets to secure the application. Payments comprise a principal amount plus interest. The interest rate for such a loan is typically higher than a secured loan. However, there is no risk of repossession of your assets if you fail to make payments.
A secured loan requires collateral and assurance of payment before approval. With this type of loan, it is possible to obtain a significant amount of funds. Bear in mind that there is the risk of losing your assets if your installments are not paid.
An alternative to the above mentioned loans is a cash-secured loan or “reverse loan”. This type of loan requires you to deposit an amount of money into an account. You then can borrow from the account in the future.