A secured loan is one backed by collateral — an asset like your home, gold, or a fixed deposit — that the lender has the legal right to seize and sell if you fail to repay the loan. Because the lender's risk is reduced by having this backup asset, secured loans, like home loans and gold loans, typically come with lower interest rates.
An unsecured loan, like a personal loan or most credit cards, isn't backed by any specific collateral — the lender approves it based purely on your income, credit score, and repayment history. Since the lender takes on more risk with no asset to fall back on, unsecured loans generally carry meaningfully higher interest rates than secured loans of a similar amount and tenure.
Choosing between the two often comes down to whether you have a suitable asset to pledge and how quickly you need the funds, since secured loans can sometimes take longer to process.