18th Nov 2009 by JonB
Security is used to describe what the lender has right to in case a loan is defaulted on or their collateral. For example, the security in a mortgage is a house. The security in a car loan is the car. An unsecured loan is with without any real collateral behind it. Examples of unsecured loans could be credit card loans, or simply a personal loan given to you by your bank. As you can imagine, unsecured loans typically have higher interest rates and less favorable terms than loans with security.
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