What Is an Unsecured Loan

An unsecured loan is a loan that does not require collateral. The lender cannot seize an asset if you default; they rely on your promise to repay and your creditworthiness. Personal loans and credit cards are common unsecured products. Use the Personal Loan Calculator to estimate payments on an unsecured personal loan.

Unsecured vs Secured

Secured loans are backed by collateral (e.g. a car or home). If you default, the lender can repossess or foreclose. Unsecured loans have no collateral, so lenders charge higher rates to compensate for the added risk. Your credit score, income, and debt-to-income ratio heavily influence whether you qualify and at what rate.

Practical Takeaway

Unsecured personal loans offer fixed payments and a set term without putting an asset at risk. Use the Personal Loan Calculator to see your payment and total cost. For how personal loans work and when to use them, see how personal loans work and personal loan vs credit card.