What "unsecured loan" means in finance

An unsecured loan is a type of loan that is not backed by collateral. This means that the borrower does not have to provide any assets or property as security for the loan. Instead, the loan is based on the borrower's creditworthiness and ability to repay the loan. Examples of unsecured loans include personal loans, credit cards, and student loans. Because they are not backed by collateral, unsecured loans typically have higher interest rates and stricter approval criteria than secured loans.