Unsecured debt refers to loans or credit that are not backed by collateral. This means that if the borrower fails to repay the debt, the lender cannot claim specific assets to recover their losses. Common examples of unsecured debt include credit card balances, personal loans, and medical bills. Because there is no collateral involved, unsecured debt typically comes with higher interest rates compared to secured debt, such as mortgages or auto loans. Lenders assess the borrower's creditworthiness to determine the risk of lending without collateral, which can impact the terms of the loan.