Definition:
An unsecured loan or credit is not secured by any assets, but is secured only by the personal guarantee of the borrower. If a borrower does not pay an unsecured loan, the lender has no assets to sell to recover its money.
If a business owner is seeking a loan and the owner has no business or personal assets to put up as collateral, sometimes a co-signer is required, to provide these assets.
Secured loans have lower interest rates than unsecured loans.
Examples:
Credit cards are examples of unsecured credit, and a bank line of credit is another example.
