A secured loan requires that the borrower provide collateral to the lender. In the event of a default, the lender has the right to seize the collateral. Home loans and car loans are all secured, in that the home or car acts as collateral that the lending institution can seize should the borrower default.
An unsecured loan requires no collateral on the part of the borrower. The terms of the loan are based solely on the borrower's promise to repay the amount. Since unsecured loans generally hold significantly more risk for the lender, interest rates on these types of loans tend to be higher.