Unsecured Loans

 

An unsecured loan (also known as a personal loan) is a loan where the borrower does not provide something of value to hold as security until the loan is repaid.  It the terms of the loan repayment are not met, then the lender will need to take legal action to recover what is owing. 

If terms of the repayment and interest on the loan are not met, then the lender will not automatically have any right to sell the security to recover the debt.

Because the lender takes more risk with an unsecured loan, available secured loans may be smaller, shorter term or at higher interest rates than secured loans.  Remember - although unsecured loans are more risk for the lender, because they will need to take more action to recover their money and may not be able to recover all of it, this does not mean there is no risk to the borrower.  If you do not meet the terms of the loan, you risk still forfeiting assets or being declared bankrupt as a result of legal action.

Unsecured loans may be available to you but will generally be much more expensive.

Able was I ere I saw Elba

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