Unsecured loans, also called personal loans or signature loans, involve borrowing money without putting up any collateral. Because there is no home or car to repossess if you don't make your payments, unsecured loans are considerably riskier for lenders. Extra risk means lenders must charge higher interest rates and require higher credit scores.
Unsecured personal loans involve much less paperwork than secured loans like mortgages, but more than products like payday advances. The terms are generally shorter, from two to five years, and loan amounts are usually smaller. Unsecured loans can be used for almost anything -- like debt consolidation, college tuition, medical bills, a business loan or the trip of a lifetime.
It's not easy to get approved for a personal loan with bad credit, and the rates for these loans are quite high. However, some lenders might offer you a better deal if you have a co-signer.
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