ECONOMICS (CBSE/UGC NET)

Detailed explanation-1: -What is an unsecured loan? An unsecured loan requires no collateral, though you are still charged interest and sometimes fees. Student loans, personal loans and credit cards are all example of unsecured loans.

Detailed explanation-2: -In an unsecured loan, a lender provides money to a borrower without any legal claim to the borrower’s assets in case of default. This means the lender has to depend solely on the borrower’s financial capacity and creditworthiness for repayment.

Detailed explanation-3: -Common types of collateral loans Mortgages, auto loans and secured personal loans are examples of loans that require some type of collateral. Each of these loans uses something different as the collateral. Mortgages would use your home as collateral, as would a home equity line of credit.