Unsecured Loan

An Unsecured Loan is a loan that is not backed by property, or any other form of collateral.  An unsecured loan is riskier to the lender because they do not have the ability to repossess, or foreclose on, a property.  This is one of the reasons the interest rate on an unsecured loan is higher than a secured loan.

The most common examples of unsecured loans are credit card debt and student loans.  In this situation, the loan may be composed of credit card charges or higher education expenses, which no longer have any tangible value.  They cannot be sold by the lending institution.

An unsecured loan is one of the two most common forms of consumer loans, the other being a secured loan.