An unsecured loan is any type of loan that does not require any form security through extra collateral, i.e., differs from a mortgage which entails having the house as a security; so the lender has no contractual entitlement to the borrower’s assets.

Typically unsecured loans are approved at higher interest rates and may be variable as a form of compensation as there is no security on the debt taken on by the lender.

Credit cards are a form of unsecured loan since no collateral is taken and the basis of this credit loan is on personal credit and timely repayments.