Two common types of loans aremortgagesandpersonal loans. The key differences between mortgages and personal loans are that mortgages are secured by the property they're used to purchase, while personal loans are usually unsecured and can be used for anything. One thing most loan types have in common, though, is that the borrower gets a lump sum of money up front and pays it off over time.
| Category | Mortgages | Personal Loans |
| Used for | To purchase real estate | Nearly anything |
| Repayment period | Up to 30 years | Up to 12 years |
| Collateral required | The home's title | Usually none |
| APR | 3% to 6% | 2.49% to 35.99% |
| Credit score required | 620 for private, 580 for government-insured | 580+ |
In general, the main types of loans are secured and unsecured loans. Secured loans are backed by collateral, such as a home or a vehicle, which the lender can seize if the borrower fails to repay the loan. On the other hand, unsecured loans do not require any collateral, and approval typically depends on your credit history, income and existing debts.
If you're interested in a personal loan, you can check out the top-rankedpersonal loanoffers andpre-qualifywith multiple lenders for free on WalletHub.
This answer was first published on 04/21/23 and it was last updated on 10/18/23. For the most current information about a financial product, you should always check and confirm accuracy with the offering financial institution. Editorial and user-generated content is not provided, reviewed or endorsed by any company.
