Why do companies distinguish between secured debts and unsecured debts?

Other answer:

The secured debtholders have a legal claim against the companies assets in the event of default. The interest rates on these loans are lower. Unsecured debt does not have a lien against assets, the interest rates on these loans are typically higher. If an institution was buying bonds or giving a loan, they would want to know how much of their assets are committed to other debt. For example, It there was a lien against your house, I would be less likely to approve a second mortgage than if you did not have a lien against the house. Even so, I would still want to know how much unsecured debt you have, because it affects your ability to pay me back.
Secured debts are usually backed up by collateral. Unsecured can be worth less
than the paper they are written on.
DR + Mrs Bears face:
Because they know they won't lose their money on a secured debt.
Flatulent Tea Bag Face:
Because like unsecured debts are not secured against anything like houses or cars. Duh moment, if you are behind on an unsecured loan then it's bad but if you are behind on a secured loan then houses and stuff can be taken. Durr duh.
Collateral or no collateral.

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