The difference between the secured and unsecured loans is that the secured loans are protected with a collateral.
While giving loans, banks usually ask the person to pledge something as a security. This collateral could be any property, jewelry or treasury. Through this the loan is secured from a threat of being the bad debt of the bank. If the person who is taking the loan is unable to pay back the loan, then the bank has the right to sell his property and pay for the loan and give the remaining amount to the person.
Similarly, loans that are given on the creditworthiness are always unsecured as the bank don't have anything to sell in case of non payment of the loan.
