An unsecured loan is a type of borrowing that does not require collateral, meaning you don’t have to put up any assets, like a house or car, to secure the loan. Instead, lenders rely on your creditworthiness and income to determine if you qualify. Because there is no collateral, these loans often come with higher interest rates compared to secured loans. Common examples of unsecured loans include personal loans, credit cards, and student loans. If you fail to repay an unsecured loan, the lender cannot claim your property, but they may take legal action or report the default to credit bureaus, which can negatively impact your credit score.