With auto and home loans, if you do not make your monthly payments on time and to the full amount, the threat of you vehicle being repossessed or losing your home to foreclosure operates as a sort of "collateral." However, with a personal loan there is no physical asset that can operate as collateral, making them unsecured loans. This means that interest rates are usually higher on personal loans to incentivize you to make your monthly payments on time and to the full amount.