Myra Chowdhury 0 last edited by
What is an unsecured (or non-collateral) loan?
ChristineJoseph last edited by
An unsecured loan is a loan that is not backed by any type of collateral.
When a person takes out a loan, the lender will often require some sort of collateral as security in case the borrower fails to repay the debt. If the borrower defaults on the loan, the lender can seize the collateral and sell it to recoup some of their losses.
An unsecured loan is different in that it is not backed by any collateral. This means that if the borrower defaults on the loan, the lender cannot seize any property or assets to cover their losses. Instead, they will have to pursue legal action against the borrower in order to recoup their losses.
Read about all these points in detail here: Education loan for abroad studies | Collateral vs Non-collateral
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