The main feature of a secured loan is the need for collateral. You borrow a sum of money from a financial institution against an asset of the same value. Depending on the loan amount you could use your car or house as collateral. These loans are relatively easy to get and you get a longer time to repay the loan. On the flip side, it also takes long to get the money and there is some paperwork involved.

An unsecured loan is one where there is no collateral required. Payday loan is an example of an unsecured personal loan. The requirements are very simple and there is hardly any paperwork involved. Convenience is the keyword for these loans. In most cases you don't even have to fax any details to the loan agency. Everything is done online or over the phone. There are no background or credit checks carried out. The money is delivered to your account within 24 hours, sometimes even sooner. Due to the nature of these loans, the amount you can borrow is limited. The loan is repaid by the amount being deducted from your bank account the day your salary comes in. The rate of interest on these loans is slightly higher than in the case of secured loans.

The urgency with which you need money determines which kind of loan you should apply for. If you have urgent expenses to pay off, then unsecured loans are the right choice for you. You get your money fast and then repay the loan amount the next month. Payday personalloans are available 24 hours a day, 7 days a week.