Unsecured loans are different to secured loans as they do not require the borrower to place security/collateral down in case of late repayments or not meeting the loan requirements set in which case they can repossess the items recovering their losses.

The lender faces a higher risk when giving out unsecured loans as they have no collateral to compensate for their loss if repayments are not met. The loan has a higher rate of interest because of the risk factor involved.

Many lenders will try to steer you towards the secured loan option, taking down the risk factor on their behalf and because the interest rates are lower on a secured loan it's a very attractive package.