Finance Glossary

Unsecured Loan

A loan not backed by any collateral. The lender relies solely on your creditworthiness and promise to repay. Because there is no security, unsecured loans typically carry higher interest rates than secured loans. Most personal loans, payday loans, and short-term loans are unsecured. If you default, the lender cannot automatically seize your assets but may pursue court action.

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Related terms

Secured Loan
A loan backed by collateral — typically your home or vehicle
Credit Score
A numerical rating assigned by credit reference agencies tha
Guarantor Loan
A loan where a third party (the guarantor) agrees to make re
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