Unsecured loans

Unsecured loans don’t require collateral, but failing to pay on time can result in a bad credit score. Your debt can also be sent to a collection agency if you don’t pay off your loan within the terms of the lender.

Here are a few examples of unsecured loans:

• Personal loans: These are often called “term loans” or “installment loans,” because they have a fixed period of time for repayment with monthly payments made in equal amounts.
• Revolving loans: These are loans that the borrower can use and repay repeatedly. Credit cards and personal lines of credit are examples of this type.
• Student loans: Loans for college are usually made out to students with few assets and little credit history, so they don’t require collateral.