There are several types of bank loans available today. Most of them will be either secured or unsecured in nature. A secured loan is one in which the bank provides the loan against a collateral. Usually the collateral will be a vehicle, jewellery or property. A percentage of the value of collateral is given as loan amount. In some rare cases, the bank will provide the entire value as loan amount. The repayment period for secured loans can vary from 5 to 30 years. In an unsecured loan, the borrower does not have to offer collateral in order to avail the loan. Hence the interest rates will be higher.

When compared to secured loans, the term period of unsecured loans is very short. Personal loans, student loans and home loans are usually unsecured in nature. The loan amount of such loans will also be lower than that of secured type loans. While the credit history of applicant is verified for secured type loans, unsecured loans rarely involve credit checks. Hence it is ideal for those with bad credit ratings. The collateral given to avail a secured loan will be lost if the individual defaults on payments. Such risks are not associated with unsecured type loans. Both types of loans are quite popular today.