Okuzeka
Finance & Banking vocabulary · Loans & Credit

Unsecured loan

Meaning in finance & banking, with examples

nounCommon term

In finance & banking, unsecured loan means: A loan given without collateral, based only on the borrower's income and credit history. It usually has a higher interest rate than a secured loan.

In Turkish: teminatsız kredi, ihtiyaç kredisi

How it is used

Common in retail lending: most personal loans and credit cards are unsecured. The opposite is a secured loan, such as a mortgage or car loan. Lenders price unsecured loans higher because recovering money after a default is harder.

Example sentences

  1. Unsecured loans carry higher rates because the bank has nothing to sell if the borrower defaults.

  2. She took out an unsecured loan to pay for her wedding.

Common collocations

  • unsecured personal loan
  • secured and unsecured loans
  • unsecured lending
  • unsecured debt
  • collateralAn asset, such as property, cash or securities, that a borrower pledges to a lender and that the lender can sell if the loan is not repaid.
  • loanMoney that a bank or another lender gives to a person or company, which must be paid back over time, usually with interest.
  • credit scoreA number that shows how likely a person is to repay debts, calculated from their credit history, such as past loans, card use and late payments.
  • guarantorA person or company that promises to repay a loan if the borrower cannot. The lender can then ask the guarantor to pay.

More terms: Loans & Credit

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This page explains English vocabulary for learners. It is not financial advice.