Secured loans are safer for lenders because if the borrower defaults, the lender can simply take the collateral and sell it to recoup the loan balance. The opposite of this is the unsecured loan. There is no property and the lender might have to sue to get repaid. In addition, the default rate is higher for unsecured debt. That means there is a greater chance that the borrower will not pay the loan back. Lenders must charge more to make up for the added risk.