A secured loan uses the asset being purchased meaning collateral, in this case the car, as security for the loan. If you the borrower can’t repay the loan, the lender can reclaim the asset to cover the costs. Although if the sale of the asset doesn’t cover the full amount owing, the borrower must pay the difference.

The benefits of a secured loan is that usually it comes with a lower and fixed rates, as the risk to your lender is lower.

Personal loans are a type of unsecured loan where the borrower is not required to offer any assets as collateral. This absence of collateral generally leads to higher interest rates compared to secured loans, as the risk to the lender is greater.

Personal loans are versatile and can be used for a variety of purposes. They are particularly useful in situations where individuals need to cover expenses that don't involve tangible assets or when they prefer not to risk their assets. These loans can be ideal for consolidating debt, financing home renovations, covering medical expenses, or funding major life events. Since these loans are unsecured, lenders typically base their approval and terms on the borrower's creditworthiness and financial history.