April 19th, 2009 by Hugh Grapling

The first thing that someone thinks of when the word loans is mentioned is money. This is definitely the most common type of loan but the truth is that a loan can be for many things and not just money.

Loans can be offered on many different bases and can be paid back in several different ways and throughout different periods of time.

A loan backed by collateral is called a secure loan. These loans are usually offered when making a large purchase such as a house or a motor vehicle. In this type of loan, if you do not pay the loan back within the specified guidelines, the item that you purchased with the loan can be taken from you by the entity that has loaned you the money.

You can also secure a loan with a house or car that was previously purchased and already owned. Just as in the previous example, if the loans is not repaid within the terms set forth, the bank can repossess the owned item to settle the debt that was incurred in the loans.

The opposite of this is the unsecured loan. The risk to the bank is higher in this type of loans so the amounts offered with unsecured loans are often less than what is offered in secured loans. Credit cards are unsecured loans. If the balance on a credit card is not paid there is no collateral that can be confiscated to pay back this balance. However, no matter what type of loan that you decide to receive or give it is imperative that you note the details of repayment, as this will vary with every individual loan.

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