What unsecured means for your loan
Learn what you still owe and what to check before you borrow.
Definition
Unsecured means you do not pledge a specific asset, such as a car, to back a loan or credit card debt.
An example of an unsecured loan
Say you take out an unsecured personal loan to pay for a car repair. You must repay the loan, but you have not pledged your car to the lender.
What to check before you borrow
Unsecured does not mean missed payments have no consequences. A lender may seek repayment through collections or court action, depending on your agreement and the law. Missed payments may also hurt your credit, depending on how they are reported.
Before you borrow, check the monthly payment, total cost, and loan terms. Personal loans and credit cards are often unsecured, but not all are.
For a related term, see collateral.