With an unsecured loan, the lender is allowing someone to borrow money based on creditworthiness and/or various other requirements. Lenders may examine potential borrowers’ credit scores and financial history, and if they determine that someone is likely to be a reliable borrower, they may be offered a loan. With secured loans, collateral of some sort will be required in order to secure the loan. This collateral could come in the form of a car, home, or another valuable asset. If the borrower can’t keep up with the loan payments, the lender may take the collateral. The collateral acts as security to ensure the lender will recover at least a portion of the debt.