There are generally two types of loans that consumers can access: secured and unsecured loans. Personal loans are a form of unsecured loans.
Secured loans are loans that require some form of collateral or security to be pledged against the amount borrowed. Home mortgages are the most common example of a secured loan. The lender usually has legal recourse by foreclosing on the collateral in the event that the borrower defaults on payment. Secured lending is often view as less risky by the lender and borrowers are typically able to borrow a larger amount, longer tenure and usually at more competitive interest rates. The collateral value of the assets is usually closely linked to the loan amount.
Unsecured loans are given without any collateral and lending decisions are made based on your monthly income and previous credit history. The lender usually views unsecured loans as riskier and generally charge higher rates of interest. The lender also gives out a personal loan for a shorter tenure (typically between 12 to 60 months) and caps the loan amount at a multiple of your income; so, for example, a personal loan provider might only be willing to lend you a total of 2 months of your monthly income and no more than that.