Unsecured Loan: What It Is, How It Works, & How To Get One – Forbes

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If you need to finance an upcoming project, unexpected expenses or even tuition, unsecured loans can help you get financing without pledging collateral like your home. These loans often come with less demanding qualification and application requirements than secured loans, and many lenders offer same- or next-day funding.

That said, unsecured loans pose more risk to lenders so you may be faced with higher rates and less favorable terms compared to secured loans. We’ll show you how unsecured loans work and help you decide if they’re a good fit for you.

What Is an Unsecured Loan?

Also called good faith loans or signature loans, unsecured loans are those that do not require the borrower to pledge any collateral.