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Unsecured Loan - Explained

What is an Unsecured Loan?

Written by Jason Gordon

Updated at September 26th, 2021

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Table of Contents

What is an Unsecured Loan?Academic Research on Unsecured loan

What is an Unsecured Loan?

An unsecured loan is a loan issued without any collateral or guarantor. Unlike a secured loan, an unsecured loan is issued without any protection or collateralization.

Contrary to a secured loan, unsecured loans are generally only available to borrowers with high credit ratings and creditworthiness. Unsecured loans pose higher risk to lenders - so, these loans have higher interest rates. Credit cards, personal loans, business loans and student loans are good examples of unsecured loans. 

Back To: COMMERCIAL LAW: CONTRACTS, PAYMENTS, SECURITY INTERESTS, & BANKRUPTCY

Related Topics

  • What is a Security Interest?
  • Collateral 
  • Pledge as Collateral
  • Collateralize
  • Cross Collateralization
  • After-Acquired Collateral
  • Unsecured Loan Definition
  • Unencumbered Asset
  • What is a Secured Creditor?
  • Unsecured Creditor
  • What are the benefits of security interests for creditors?
  • Limited Recourse Debt

Academic Research on Unsecured loan

  • The sterling unsecured loan market during 2006-08: insights from network theory, Vila, A., Soramaki, K., & Zimmerman, P. (2010). 
  • The relationship between the overnight interbank unsecured loan market and the CHAPS Sterling system, Millard, S., & Polenghi, M. (2004). 
  • Household's optimal mortgage and unsecured loan default decision, Kim, J. (2015). Journal of Macroeconomics, 45, 222-244.
  • Interest rates and default in unsecured loan markets, Divino, J. A., Lima, E. S., & Orrillo, J. (2009, October). In 31 Meeting of the Brazilian Econometric Society.
  • State Ownership Corporate and Unsecured Loan: Government Intervention, Implicit Collateral or Information Advantage?[J], Chun, Y. (2010). Accounting Research, 8, 009.
  • Interest rates and default in unsecured loan markets, Divino, J. A., Lima, E. S., & Orrillo, J. (2013). Quantitative Finance, 13(12), 1925-1934.
  • Long-Run Performance of Redeemable Convertible Unsecured Loan Stocks (RCULS) and Irredeemable Convertible Unsecured Loan Stocks (ICULS), Abdoh, M., & Yaseer, W. M. (2007). (Doctoral dissertation, Universiti Utara Malaysia).
  • A Bayesian hierarchical model for unsecured loan Loss Given Default, Bijak, K. (2015). 
  • The sterling unsecured loan market during 20062008: insights from network topology, Soramki, A. W. P. Z. K. Simulation analyses and stress testing of payment networks.
  • Customer satisfaction survey of unsecured loan customers of BRAC Bank limited, Akhtar, J. (2012). 
  • A model of complex equity funding for contingent acquisitionsa case study of non-interest bearing convertible unsecured loan stock, Hillier, D., & Marshall, A. P. (1998). Journal of Corporate Finance, 4(2), 133-152.
  • Naked debenture. A DEBENTURE which is issued in respect of an unsecured loan. named vote. A vote in which a record is kept of each personal vote; it is normally , Lamming, R. (1988). 
  • Convertible Unsecured Loan Stocks, Conroy, R. M. 
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