When it comes to personal lending, many people often go for the cheapest / lowest interest option, especially when it comes to lending in the form of loans. This is often a terrible mistake. Many borrowers often secure their homes / properties against small, insignificant loans, purely because the interest rate is slightly lower on a secured loan compared with a personal loan. This is obviously extremely risky as with a secured loan, your home or other significant asset is at risk. Sure, if you have the funds available to easily make a monthly payment, then you might consider it a risk worth taking, but nobody knows what will happen in the future. People are made redundant all the time or lose their jobs for other reasons which could lead to you not being able to service the payments on your loan. If this happens, not only will you damage your credit rating, but as you’ve taken out a secured loan, your bank or other third party lender could seize your asset (your property) either until you pay back the loan in full or until they sell your property to cover the cost of the loan.
This is obviously something you want to avoid. If the loan is for a small amount, take it as a personal loan, even if it is slightly more interest. It’s just not worth the risk in doing otherwise.