Unsecured Loans

The Hindu Business Line  Jul 4  Comment 
'Outstanding unsecured loans should reach about Rs 9.5 lakh crore by fiscal 2021'
Financial Times  Apr 25  Comment 
Regulator says mainstream lenders are better than loan sharks for struggling families
Financial Times  Oct 12  Comment 
Lenders more risk averse and concerned about outlook, Bank of England survey shows
MarketWatch  Apr 26  Comment 
LendingClub Corp. is planning its first bond sale to fund operations.
The Hindu Business Line  Dec 13  Comment 
Aditya Birla Finance, a non-banking finance company (NBFC), will foray into unsecured lending with personal loan and business loan segments from January. “We want to focus on personal loa...
Forbes  Jul 2  Comment 
There is no doubt that small and medium enterprises (SMEs) are an immensely promising segment of the world’s growing economies. However, firms in this segment consistently rate access to finance as the top barrier to growth. Neither small enough...
Wall Street Journal  Oct 9  Comment 
These personal loans can be particularly useful to pay off costly credit-card debt.
Wall Street Journal  Sep 29  Comment 
South Africa is grappling with rising defaults on a mounting pile of unsecured personal loans, high-interest-rate debt not backed by collateral like a house or car.
Reuters  Oct 24  Comment 
Unsecured loans in South Africa surged by 21 percent to $43 billion in the year to June, the central bank said on Wednesday, as banks in Africa's top economy continue to plough into the profitable and potentially risky market.
The Hindu Business Line  Mar 25  Comment 
The Finance Ministry has thrown a wet blanket on public sector banks' tendency to ‘accommodate' public sector undertakings and large companies by giving them short-term, unsecured loans. ...


Unsecured Loans are loans that are not backed by collateral. This is in contrast to secured loans, wherein the borrower must pledge some asset (e.g. real estate, personal property, investment securities) to the lender should he default on the loan.

Unsecured loans are sometimes called "signature loans" because the bank has nothing but your signature. If the borrower goes into default they cannot posses any of your belongings; rather, they can report you to credit reporting companies and taint your credit.

12 month loans

Typically, unsecured loans are issued on the basis of the borrower's credit rating, though it should be noted that all loans lacking a collateral pledge (including informal loans between friends) are technically unsecured loans. For borrowers who don't have any collateral to pledge, these unsecured loans may seem attractive. However, since there is an increased risk for the bank, most of the times the interest rates are higher.

Commercial Paper is a notable unsecured loan.


  • A man faces an unexpected, immediate expense (perhaps he suffers a medical emergency) and needs to procure money immediately. Because he has excellent credit, he is able to procure a short-term unsecured loan from his bank to pay for his expenses.
  • Two friends are going to a football game. One of them has left his wallet in the car, a fact which he does not realize until they reach the ticket window. The friend who still has his wallet pays for both tickets on the condition that the wallet-less friend reimburse him as soon as they reach the car. As no collateral was offered, this is an unsecured loan.

See Also

Wikinvest © 2006, 2007, 2008, 2009, 2010, 2011, 2012. Use of this site is subject to express Terms of Service, Privacy Policy, and Disclaimer. By continuing past this page, you agree to abide by these terms. Any information provided by Wikinvest, including but not limited to company data, competitors, business analysis, market share, sales revenues and other operating metrics, earnings call analysis, conference call transcripts, industry information, or price targets should not be construed as research, trading tips or recommendations, or investment advice and is provided with no warrants as to its accuracy. Stock market data, including US and International equity symbols, stock quotes, share prices, earnings ratios, and other fundamental data is provided by data partners. Stock market quotes delayed at least 15 minutes for NASDAQ, 20 mins for NYSE and AMEX. Market data by Xignite. See data providers for more details. Company names, products, services and branding cited herein may be trademarks or registered trademarks of their respective owners. The use of trademarks or service marks of another is not a representation that the other is affiliated with, sponsors, is sponsored by, endorses, or is endorsed by Wikinvest.
Powered by MediaWiki