An unsecured loan is a loan in which the financial institution has not required the borrower to put up any type of collateral. Those who qualify for these types of loans are generally required to have a fairly good credit report because the lending institution needs a positive indication that the loan will be paid back in full. Unsecured loans are becoming difficult for many people to obtain these days, and they can sometimes involve high interest rates. Those who are thinking about getting an unsecured loan should ask themselves whether they can make the payments on time. Not paying off an unsecured loan in a timely manner will result in damage to one’s credit score and possible difficulty in obtaining credit in the future. However, there is usually a preferred alternative to secured loans that requires the borrower to put up his or her house or car as collateral.
