{"id":22876,"date":"2026-01-15T00:57:06","date_gmt":"2026-01-15T00:57:06","guid":{"rendered":"https:\/\/budgetadirect.com\/?p=22876"},"modified":"2026-01-15T00:57:06","modified_gmt":"2026-01-15T00:57:06","slug":"what-is-an-unsecured-loan-and-how-do-they-work","status":"publish","type":"post","link":"https:\/\/budgetadirect.com\/?p=22876","title":{"rendered":"What Is An Unsecured Loan And How Do They Work?"},"content":{"rendered":"<div id=\"\">\n<div class=\"overflow-hidden relative bg-blue-50 aspect-video w-full rounded-lg\"><\/div>\n<p>\n            Image by GettyImages; Illustration by Bankrate\n        <\/p>\n<\/p><\/div>\n<div xmlns:default=\"http:\/\/www.w3.org\/2000\/svg\">\n<div id=\"block_b1288812298df8c545eb1ff9295b363f\" class=\"key-takeaways sm:border-l-4 border-(--accent) sm:pl-8 my-8 relative\" style=\"--accent: var(--color-blue-medium)\">\n    <!-- htmlmin:ignore --><\/p>\n<h2 class=\"heading-4 mt-0 mb-4 text-crop-none max-sm:flex max-sm:items-center max-sm:gap-4\" id=\"key-takeaways\" data-position=\"0\" data-beam-element-viewed=\"\" data-id=\"br-h2-0-onpage-placement\" data-type=\"h2\" data-location=\"Editorial\" data-name=\"h2_all\" data-text=\"Key takeaways\" data-outcome=\"\">\n    <span class=\"shrink-0\">Key takeaways<\/span><br \/>\n        <span class=\"max-sm:h-0.5 max-sm:w-full max-sm:w-full max-sm:bg-(--accent) max-sm:rounded-full max-sm:block\"\/><br \/>\n    <\/h2>\n<p>    <!-- htmlmin:ignore --><\/p>\n<ul class=\"flex flex-col text-gray-700 mb-0 gap-2 list-disc\">\n<li class=\"pl-4 relative marker:text-(--accent)\">\n                                                            Unsecured loans are debt products that do not require collateral but may come with higher interest rates and stricter credit requirements.\n                                                <\/li>\n<li class=\"pl-4 relative marker:text-(--accent)\">\n                                                            There are various unsecured loans, including personal loans, student loans, and credit cards.\n                                                <\/li>\n<li class=\"pl-4 relative marker:text-(--accent)\">\n                                                            When determining eligibility for an unsecured loan, lenders will consider factors such as credit history, income and debt-to-income ratio.\n                                                <\/li>\n<\/ul>\n<\/div>\n<p>Unsecured loans are offered by banks, credit unions and online lenders. Unlike secured loans, they\u2019re not backed by collateral and may be harder to get approved for than a secured option. However, they come with less risk as you won\u2019t need to worry about your assets being seized should you fail to make the payments.<\/p>\n<p>Most installment loans are unsecured. This includes student loans, personal loans and revolving credit such as credit cards. Eligibility will vary from lender to lender, but you\u2019ll generally need good or excellent credit and a steady source of income to qualify.<\/p>\n<p>The most creditworthy borrowers are more likely to be offered the best loan terms and lowest interest rates. You can generally use an unsecured loan for nearly every legal expense.<\/p>\n<h2 id=\"what-is\" data-position=\"1\" data-beam-element-viewed=\"\" data-id=\"br-h2-1-onpage-placement\" data-type=\"h2\" data-location=\"Editorial\" data-name=\"h2_all\" data-text=\"What is an unsecured loan?\" data-outcome=\"\">What is an unsecured loan?<\/h2>\n<p>Unsecured loans are loans that don\u2019t require collateral. They\u2019re also referred to as signature loans because a signature is all that\u2019s needed if you meet the lender\u2019s borrowing requirements. Because lenders take on more risk when loans aren\u2019t backed by collateral, they often charge higher interest rates and require good or excellent credit to get approved.<\/p>\n<p><u>Secured loans differ from unsecured loans<\/u> in that secured loans require collateral. The lender won\u2019t approve a secured loan if a borrower doesn\u2019t agree to provide an asset as insurance.<\/p>\n<p>Unsecured loans are available as revolving debt \u2014 a credit card \u2014 or an installment loan, like a personal or student loan. Installment loans require you to pay back the total balance in fixed, monthly installments over a set period.<\/p>\n<p>Credit cards allow you to use what you need when you need it. However, credit cards\u2019 average interest rates are higher than loans. If you miss a monthly payment, you\u2019ll be charged interest on top of the principal amount.<\/p>\n<h3>Who should get an unsecured loan?<\/h3>\n<p>Borrowers who need money but aren\u2019t comfortable pledging collateral to secure a loan can consider <u>applying for an unsecured loan<\/u> when:<\/p>\n<ul class=\"wp-block-list\">\n<li>\n<strong>Planning for a large purchase.<\/strong> Taking on debt can strain your finances, but if you need funds for a big upcoming expense, an unsecured loan can help.<\/li>\n<li>\n<strong>They have good credit.<\/strong> A high credit score unlocks more favorable unsecured loan terms and interest rates.<\/li>\n<li>\n<strong>They have reliable income.<\/strong> Although collateral isn\u2019t needed for an unsecured loan, you\u2019ll need steady income to repay the debt and avoid defaulting on the loan. Unpaid secured loans can negatively affect your credit.<\/li>\n<li>\n<strong>Consolidating debt.<\/strong> Unsecured loans are useful as debt consolidation tools that can make debt repayment simpler. This strategy can also help borrowers save money if they qualify for lower interest rates.<\/li>\n<\/ul>\n<h3>Types of unsecured loans<\/h3>\n<p>There are several types of unsecured loans to choose from. However, the most popular options are personal loans, student loans and credit cards.<\/p>\n<ul class=\"Accordion w-full align\">\n<li x-id=\"['panel-personal-loans', 'heading-personal-loans']\" x-data=\"{ expanded: 0 }\" class=\"Accordion-item\">\n<button class=\"Accordion-titleContainer py-4 px-3 sm:px-6 group sm:py-6\" type=\"button\" :id=\"$id('heading-personal-loans')\" :aria-controls=\"$id('panel-personal-loans')\" :aria-expanded=\"expanded ? true : false\" x-on:click=\"expanded = !expanded\" :data-outcome=\"expanded ? 'open_accordion' : 'close_accordion'\"><!-- htmlmin:ignore --><\/p>\n<h3 class=\"Accordion-title my-0 mr-2 md:flex-1\">\n    Personal loans<br \/>\n    <\/h3>\n<p><!-- htmlmin:ignore --><span class=\"Accordion-icon Icon mb-0 block leading-none Icon--sm icon-base-blue-600\" aria-hidden=\"true\"><default:svg xmlns=\"http:\/\/www.w3.org\/2000\/svg\" class=\"Icon-glyph\" viewbox=\"0 0 24 24\" fill=\"currentColor\" focusable=\"false\"><default:title>Caret Down Icon<\/default:title><br \/>\n<default:path d=\"M12 17.152c-.33 0-.675-.131-.94-.378L3.384 9.09a1.32 1.32 0 0 1 0-1.86c.51-.51 1.351-.51 1.862 0L12 13.977l6.755-6.747c.51-.51 1.351-.51 1.862 0 .51.51.51 1.35 0 1.86l-7.694 7.684a1.295 1.295 0 0 1-.94.378H12Z\" class=\"icon-base\"\/><\/default:svg><\/span><\/button><\/p>\n<div class=\"Accordion-contentWrapper\" :id=\"$id('panel-personal-loans')\" :aria-labelledby=\"$id('heading-personal-loans')\" x-show=\"expanded\" x-collapse=\"\" role=\"region\" style=\"height: 0; overflow: hidden; display: none;\">\n<div class=\"Accordion-content text-gray-700 px-3 pb-4 sm:px-6 sm:pb-6\">\n<p>A personal loan can consolidate debt, finance a large purchase, expense an ongoing project or finance home renovations.<\/p>\n<p>There are personal loans available for nearly everything, including wedding loans, pet loans and holiday loans. Technically these are just unsecured personal loans (also called signature loans) in which the funds are to be exclusively used for related purchases. Personal loan interest rates are typically lower than credit card rates.<\/p>\n<ul>\n<li>\n<strong>Loan amount: <\/strong>Around $1,000 to $50,000<\/li>\n<li>\n<strong>Average interest rate:<\/strong>12.19% (as of Jan. 14, 2026)<\/li>\n<li>\n<strong>Repayment timeline: <\/strong>Anywhere from two to seven years<\/li>\n<\/ul>\n<p><strong>Who a personal loan is best for: <\/strong>Good credit borrowers who know exactly how much funding they need.<\/p>\n<p>\u00a0<\/p>\n<\/div>\n<\/div>\n<\/li>\n<li x-id=\"['panel-student-loans', 'heading-student-loans']\" x-data=\"{ expanded: 0 }\" class=\"Accordion-item\">\n<button class=\"Accordion-titleContainer py-4 px-3 sm:px-6 group sm:py-6\" type=\"button\" :id=\"$id('heading-student-loans')\" :aria-controls=\"$id('panel-student-loans')\" :aria-expanded=\"expanded ? true : false\" x-on:click=\"expanded = !expanded\" :data-outcome=\"expanded ? 'open_accordion' : 'close_accordion'\"><!-- htmlmin:ignore --><\/p>\n<h3 class=\"Accordion-title my-0 mr-2 md:flex-1\">\n    Student loans<br \/>\n    <\/h3>\n<p><!-- htmlmin:ignore --><span class=\"Accordion-icon Icon mb-0 block leading-none Icon--sm icon-base-blue-600\" aria-hidden=\"true\"><default:svg xmlns=\"http:\/\/www.w3.org\/2000\/svg\" class=\"Icon-glyph\" viewbox=\"0 0 24 24\" fill=\"currentColor\" focusable=\"false\"><default:title>Caret Down Icon<\/default:title><br \/>\n<default:path d=\"M12 17.152c-.33 0-.675-.131-.94-.378L3.384 9.09a1.32 1.32 0 0 1 0-1.86c.51-.51 1.351-.51 1.862 0L12 13.977l6.755-6.747c.51-.51 1.351-.51 1.862 0 .51.51.51 1.35 0 1.86l-7.694 7.684a1.295 1.295 0 0 1-.94.378H12Z\" class=\"icon-base\"\/><\/default:svg><\/span><\/button><\/p>\n<div class=\"Accordion-contentWrapper\" :id=\"$id('panel-student-loans')\" :aria-labelledby=\"$id('heading-student-loans')\" x-show=\"expanded\" x-collapse=\"\" role=\"region\" style=\"height: 0; overflow: hidden; display: none;\">\n<div class=\"Accordion-content text-gray-700 px-3 pb-4 sm:px-6 sm:pb-6\">\n<p>There are two types of student loans: federal and private student loans.\u00a0Federal loans are the better choice for most borrowers because they carry much lower rates and are available to every student attending a participating college. Private lenders offer\u00a0private student loans and can come with higher rates and more stringent eligibility requirements. These loans are best used when filling funding gaps, as they don\u2019t come with the benefits and protections that federal loans offer.<\/p>\n<ul>\n<li>\n<strong>Loan amount:<\/strong> Up to full cost of attendance (private loans only)<\/li>\n<li>\n<strong>Average interest rate: <\/strong>Up to 17% (private loans), up to 8.05% (federal loans)<\/li>\n<li>\n<strong>Repayment timeline: <\/strong>Anywhere from five to 20 years, but will vary for every borrower<\/li>\n<\/ul>\n<p><strong>Who a student loan is best for:<\/strong> Upcoming and current post-secondary education students supplementing their need- or merit-based financial aid.<\/p>\n<p>\u00a0<\/p>\n<\/div>\n<\/div>\n<\/li>\n<li x-id=\"['panel-credit-cards', 'heading-credit-cards']\" x-data=\"{ expanded: 0 }\" class=\"Accordion-item\">\n<button class=\"Accordion-titleContainer py-4 px-3 sm:px-6 group sm:py-6\" type=\"button\" :id=\"$id('heading-credit-cards')\" :aria-controls=\"$id('panel-credit-cards')\" :aria-expanded=\"expanded ? true : false\" x-on:click=\"expanded = !expanded\" :data-outcome=\"expanded ? 'open_accordion' : 'close_accordion'\"><!-- htmlmin:ignore --><\/p>\n<h3 class=\"Accordion-title my-0 mr-2 md:flex-1\">\n    Credit cards<br \/>\n    <\/h3>\n<p><!-- htmlmin:ignore --><span class=\"Accordion-icon Icon mb-0 block leading-none Icon--sm icon-base-blue-600\" aria-hidden=\"true\"><default:svg xmlns=\"http:\/\/www.w3.org\/2000\/svg\" class=\"Icon-glyph\" viewbox=\"0 0 24 24\" fill=\"currentColor\" focusable=\"false\"><default:title>Caret Down Icon<\/default:title><br \/>\n<default:path d=\"M12 17.152c-.33 0-.675-.131-.94-.378L3.384 9.09a1.32 1.32 0 0 1 0-1.86c.51-.51 1.351-.51 1.862 0L12 13.977l6.755-6.747c.51-.51 1.351-.51 1.862 0 .51.51.51 1.35 0 1.86l-7.694 7.684a1.295 1.295 0 0 1-.94.378H12Z\" class=\"icon-base\"\/><\/default:svg><\/span><\/button><\/p>\n<div class=\"Accordion-contentWrapper\" :id=\"$id('panel-credit-cards')\" :aria-labelledby=\"$id('heading-credit-cards')\" x-show=\"expanded\" x-collapse=\"\" role=\"region\" style=\"height: 0; overflow: hidden; display: none;\">\n<div class=\"Accordion-content text-gray-700 px-3 pb-4 sm:px-6 sm:pb-6\">\n<p>Credit cards are one of the most common financing options. They\u2019re a revolving debt, so the funds are available whenever needed. You can borrow up to your credit limit, which is assigned by the lender, and can borrow up to that limit. You can use a credit card to consolidate debt, for everyday spending, or to fund a larger purchase or experience. However, rates can be high and interest adds up fast if you carry a balance.<\/p>\n<ul>\n<li>\n<strong>Credit limit: <\/strong>Typically between $2,000 and $10,000<\/li>\n<li>\n<strong>Average interest rate: <\/strong>19.64% (as of Jan. 14, 2026<\/li>\n<li>\n<strong>Repayment timeline:<\/strong> No specified timeline<\/li>\n<\/ul>\n<p><strong>Who a credit card is best for: <\/strong>Individuals with healthy spending habits looking for a long-term revolving line of credit.<\/p>\n<p>\u00a0<\/p>\n<\/div>\n<\/div>\n<\/li>\n<\/ul>\n<h3 id=\"pros-cons\">Pros and cons of unsecured loans<\/h3>\n<p>Unsecured loan options may be less risky than other loan types for certain borrowers, but not all. When taking out any long-term debt, making a fully educated decision is crucial to promoting financial health.<\/p>\n<div id=\"block_33fa8a8bbfebde2e1a9d2b0f641f55a6\" class=\"flex flex-col gap-8 my-6 not-wysiwyg\">\n<div class=\"ProsAndConsTable\">\n<div class=\"ProsAndConsItem\">\n<div class=\"ProsAndConsItem-headerContainer flex items-center gap-2\">\n<div>\n                <img decoding=\"async\" src=\"https:\/\/budgetadirect.com\/wp-content\/uploads\/2025\/06\/circle-check.svg.svg+xml\" alt=\"Green circle with a checkmark inside\"\/>\n            <\/div>\n<p>            <!-- htmlmin:ignore --><\/p>\n<h3 class=\"ProsAndConsItem-header\">\n    Pros of unsecured loans<br \/>\n    <\/h3>\n<p>    <!-- htmlmin:ignore -->\n        <\/div>\n<ul class=\"ProsAndConsItem-list\">\n<li>No collateral required.<\/li>\n<li>Fast access to funds.<\/li>\n<li>No risk of losing assets.<\/li>\n<li>Fewer borrowing restrictions.<\/li>\n<li>Competitive rates for those with strong credit.<\/li>\n<\/ul><\/div>\n<div class=\"ProsAndConsItem\">\n<div class=\"ProsAndConsItem-headerContainer flex items-center gap-2\">\n<div>\n                <img decoding=\"async\" src=\"https:\/\/budgetadirect.com\/wp-content\/uploads\/2025\/06\/remove-circle.svg.svg+xml\" alt=\"Red circle with an X inside\"\/>\n            <\/div>\n<p>            <!-- htmlmin:ignore --><\/p>\n<h3 class=\"ProsAndConsItem-header\">\n    Cons of unsecured loans<br \/>\n    <\/h3>\n<p>    <!-- htmlmin:ignore -->\n        <\/div>\n<ul class=\"ProsAndConsItem-list\">\n<li>Risk of losing assets.<\/li>\n<li>Might have lower borrowing limits for those with low credit scores.<\/li>\n<li>Might have higher interest rates for those with low credit scores.<\/li>\n<li>Harder to get approved.<\/li>\n<li>Has fewer borrowing options than secured loans.<\/li>\n<\/ul><\/div>\n<\/div><\/div>\n<h2 id=\"qualifications\" data-position=\"2\" data-beam-element-viewed=\"\" data-id=\"br-h2-2-onpage-placement\" data-type=\"h2\" data-location=\"Editorial\" data-name=\"h2_all\" data-text=\"Qualifications for an unsecured loan\" data-outcome=\"\">Qualifications for an unsecured loan<\/h2>\n<p>To limit their risk, lenders want to be reasonably sure you can repay the loan. Lenders measure that risk by checking a few factors, so they may ask about the following information when you apply for an unsecured loan (and tailor the loan terms according to your answers):<\/p>\n<ul class=\"wp-block-list\">\n<li>\n<strong>Your credit:<\/strong> Lenders\u00a0<u>check your credit reports<\/u> to see how you\u2019ve managed loans and credit cards in the past. Generally, they look for a history of responsible credit use (typically one or more years), on-time payments, low credit card balances and a<u> mix of account types<\/u>. They\u2019ll also check your\u00a0<u>credit scores<\/u>, which are calculated based on the information in your credit reports. Consumers with FICO credit scores around 700 or higher usually qualify for the best interest rates.<\/li>\n<li>\n<strong>Your income:<\/strong> Knowing you have the means to meet your financial obligations, including the loan payments, lowers the lender\u2019s risk. The lender may ask to see proof of stable, sufficient income, such as a current pay stub.<\/li>\n<li>\n<strong>Your debt-to-income ratio:<\/strong> To calculate your\u00a0<u>debt-to-income ratio (DTI)<\/u>, add all your monthly debt payments and divide that total by your gross monthly income. Lenders use this number to measure your ability to repay a loan. The lower the ratio, the better.\u00a0<\/li>\n<li>\n<strong>Your assets:<\/strong> Although unsecured loans don\u2019t require collateral, the lender may want to know you have savings. They know you\u2019re less likely to miss loan payments when you\u2019re prepared to cover financial emergencies.<\/li>\n<\/ul>\n<p>Many lenders offer\u00a0<u>prequalification<\/u>, so you can check if you qualify before formally applying for a loan.\u00a0<\/p>\n<h2 data-position=\"3\" data-beam-element-viewed=\"\" data-id=\"br-h2-3-onpage-placement\" data-type=\"h2\" data-location=\"Editorial\" data-name=\"h2_all\" data-text=\"Bottom line\" data-outcome=\"\">Bottom line<\/h2>\n<p>The main advantage of an unsecured loan is that you don\u2019t have to pledge collateral. But if you default on the loan, you could still face serious consequences, like major damage to your credit. Plus, a lender could take you to court to garnish your wages.<\/p>\n<p>Taking out an unsecured loan can be good if you plan to repay the debt. If you decide an unsecured loan is right, compare rates, terms, and fees from as many lenders as possible before applying.<\/p>\n<h2 data-position=\"4\" data-beam-element-viewed=\"\" data-id=\"br-h2-4-onpage-placement\" data-type=\"h2\" data-location=\"Editorial\" data-name=\"h2_all\" data-text=\"Frequently asked questions\" data-outcome=\"\">Frequently asked questions<\/h2>\n<ul class=\"Accordion w-full align\">\n<li x-id=\"['panel-do-unsecured-loans-hurt-your-credit-score', 'heading-do-unsecured-loans-hurt-your-credit-score']\" x-data=\"{ expanded: 0 }\" class=\"Accordion-item\">\n<button class=\"Accordion-titleContainer py-4 px-3 sm:px-6 group sm:py-6\" type=\"button\" :id=\"$id('heading-do-unsecured-loans-hurt-your-credit-score')\" :aria-controls=\"$id('panel-do-unsecured-loans-hurt-your-credit-score')\" :aria-expanded=\"expanded ? true : false\" x-on:click=\"expanded = !expanded\" :data-outcome=\"expanded ? 'open_accordion' : 'close_accordion'\"><!-- htmlmin:ignore --><\/p>\n<h3 class=\"Accordion-title my-0 mr-2 md:flex-1\">\n    Do unsecured loans hurt your credit score?<br \/>\n    <\/h3>\n<p><!-- htmlmin:ignore --><span class=\"Accordion-icon Icon mb-0 block leading-none Icon--sm icon-base-blue-600\" aria-hidden=\"true\"><default:svg xmlns=\"http:\/\/www.w3.org\/2000\/svg\" class=\"Icon-glyph\" viewbox=\"0 0 24 24\" fill=\"currentColor\" focusable=\"false\"><default:title>Caret Down Icon<\/default:title><br \/>\n<default:path d=\"M12 17.152c-.33 0-.675-.131-.94-.378L3.384 9.09a1.32 1.32 0 0 1 0-1.86c.51-.51 1.351-.51 1.862 0L12 13.977l6.755-6.747c.51-.51 1.351-.51 1.862 0 .51.51.51 1.35 0 1.86l-7.694 7.684a1.295 1.295 0 0 1-.94.378H12Z\" class=\"icon-base\"\/><\/default:svg><\/span><\/button><\/p>\n<div class=\"Accordion-contentWrapper\" :id=\"$id('panel-do-unsecured-loans-hurt-your-credit-score')\" :aria-labelledby=\"$id('heading-do-unsecured-loans-hurt-your-credit-score')\" x-show=\"expanded\" x-collapse=\"\" role=\"region\" style=\"height: 0; overflow: hidden; display: none;\">\n<div class=\"Accordion-content text-gray-700 px-3 pb-4 sm:px-6 sm:pb-6\">\n<p dir=\"ltr\">As with any new loan application, applying for an unsecured loan means getting a hard credit inquiry from the lender. This can cause your credit score to temporarily drop by as many as 10 points, but if you make your loan payments on time, your credit score can go up in the long-term.<\/p>\n<\/div>\n<\/div>\n<\/li>\n<li x-id=\"['panel-what-happens-if-you-dont-pay-your-unsecured-loans', 'heading-what-happens-if-you-dont-pay-your-unsecured-loans']\" x-data=\"{ expanded: 0 }\" class=\"Accordion-item\">\n<button class=\"Accordion-titleContainer py-4 px-3 sm:px-6 group sm:py-6\" type=\"button\" :id=\"$id('heading-what-happens-if-you-dont-pay-your-unsecured-loans')\" :aria-controls=\"$id('panel-what-happens-if-you-dont-pay-your-unsecured-loans')\" :aria-expanded=\"expanded ? true : false\" x-on:click=\"expanded = !expanded\" :data-outcome=\"expanded ? 'open_accordion' : 'close_accordion'\"><!-- htmlmin:ignore --><\/p>\n<h3 class=\"Accordion-title my-0 mr-2 md:flex-1\">\n    What happens if you don\u2019t pay your unsecured loans?<br \/>\n    <\/h3>\n<p><!-- htmlmin:ignore --><span class=\"Accordion-icon Icon mb-0 block leading-none Icon--sm icon-base-blue-600\" aria-hidden=\"true\"><default:svg xmlns=\"http:\/\/www.w3.org\/2000\/svg\" class=\"Icon-glyph\" viewbox=\"0 0 24 24\" fill=\"currentColor\" focusable=\"false\"><default:title>Caret Down Icon<\/default:title><br \/>\n<default:path d=\"M12 17.152c-.33 0-.675-.131-.94-.378L3.384 9.09a1.32 1.32 0 0 1 0-1.86c.51-.51 1.351-.51 1.862 0L12 13.977l6.755-6.747c.51-.51 1.351-.51 1.862 0 .51.51.51 1.35 0 1.86l-7.694 7.684a1.295 1.295 0 0 1-.94.378H12Z\" class=\"icon-base\"\/><\/default:svg><\/span><\/button><\/p>\n<div class=\"Accordion-contentWrapper\" :id=\"$id('panel-what-happens-if-you-dont-pay-your-unsecured-loans')\" :aria-labelledby=\"$id('heading-what-happens-if-you-dont-pay-your-unsecured-loans')\" x-show=\"expanded\" x-collapse=\"\" role=\"region\" style=\"height: 0; overflow: hidden; display: none;\">\n<div class=\"Accordion-content text-gray-700 px-3 pb-4 sm:px-6 sm:pb-6\">\n<p dir=\"ltr\">If you are behind on payments, your credit score will be damaged. Missing multiple payments may put you in\u00a0default on the loan. You may be pursued by debt collectors and the lender may sue you.<\/p>\n<\/div>\n<\/div>\n<\/li>\n<li x-id=\"['panel-how-hard-is-it-to-get-an-unsecured-loan', 'heading-how-hard-is-it-to-get-an-unsecured-loan']\" x-data=\"{ expanded: 0 }\" class=\"Accordion-item\">\n<button class=\"Accordion-titleContainer py-4 px-3 sm:px-6 group sm:py-6\" type=\"button\" :id=\"$id('heading-how-hard-is-it-to-get-an-unsecured-loan')\" :aria-controls=\"$id('panel-how-hard-is-it-to-get-an-unsecured-loan')\" :aria-expanded=\"expanded ? true : false\" x-on:click=\"expanded = !expanded\" :data-outcome=\"expanded ? 'open_accordion' : 'close_accordion'\"><!-- htmlmin:ignore --><\/p>\n<h3 class=\"Accordion-title my-0 mr-2 md:flex-1\">\n    How hard is it to get an unsecured loan?<br \/>\n    <\/h3>\n<p><!-- htmlmin:ignore --><span class=\"Accordion-icon Icon mb-0 block leading-none Icon--sm icon-base-blue-600\" aria-hidden=\"true\"><default:svg xmlns=\"http:\/\/www.w3.org\/2000\/svg\" class=\"Icon-glyph\" viewbox=\"0 0 24 24\" fill=\"currentColor\" focusable=\"false\"><default:title>Caret Down Icon<\/default:title><br \/>\n<default:path d=\"M12 17.152c-.33 0-.675-.131-.94-.378L3.384 9.09a1.32 1.32 0 0 1 0-1.86c.51-.51 1.351-.51 1.862 0L12 13.977l6.755-6.747c.51-.51 1.351-.51 1.862 0 .51.51.51 1.35 0 1.86l-7.694 7.684a1.295 1.295 0 0 1-.94.378H12Z\" class=\"icon-base\"\/><\/default:svg><\/span><\/button><\/p>\n<div class=\"Accordion-contentWrapper\" :id=\"$id('panel-how-hard-is-it-to-get-an-unsecured-loan')\" :aria-labelledby=\"$id('heading-how-hard-is-it-to-get-an-unsecured-loan')\" x-show=\"expanded\" x-collapse=\"\" role=\"region\" style=\"height: 0; overflow: hidden; display: none;\">\n<p>\n            Anyone can apply for an unsecured loan, but those with reliable income, good credit and a low DTI will qualify for the best rates. Your ability to qualify for an unsecured loan will depend on how well you match up with a given lender\u2019s qualification requirements.\n        <\/p>\n<\/div>\n<\/li>\n<\/ul>\n<div class=\"HelpfulCTA mx-auto flex flex-col items-center gap-6 my-6 py-12 text-base border-y border-gray-200\" data-helpful-cta=\"\" data-beam-element-viewed=\"\" id=\"did-you-find-this-helpful\" data-type=\"cta\" data-location=\"article-bottom\" data-position=\"banner\" data-text=\"Did you find this page helpful?\">\n<div class=\"HelpfulCTA-initial w-full flex flex-col items-center gap-4\" data-cta-initial=\"\">\n<div class=\"HelpfulCTA-question text-lg font-bold text-center text-gray-900\">\n            Did you find this page helpful?<\/p>\n<div id=\"ATlJ5aeKdC\" class=\"hidden\">\n<div class=\"wysiwyg wysiwyg--sm wysiwyg--flush max-w-xs\">\n<p class=\"mb-6 text-base\">\n                            <strong class=\"block font-bold text-gray-900\">Why we ask for feedback<\/strong><br \/>\n                            Your feedback helps us improve our content and services. It takes less than a minute to<br \/>\n                            complete.\n                        <\/p>\n<p>Your responses are anonymous and will only be used for improving our website.<\/p>\n<\/p><\/div>\n<\/p><\/div>\n<\/p><\/div>\n<p>Help us improve our content<\/p>\n<div class=\"HelpfulCTA-actions flex gap-4 mt-2\">\n            <button type=\"button\" class=\"HelpfulCTA-btn HelpfulCTA-btn--yes border border-2 border-blue-600 text-blue-600 rounded px-6 py-2 transition font-semibold flex items-center gap-2 hover:bg-blue-50\" data-cta-yes=\"\" data-beam-element-clicked=\"\" id=\"did-you-find-this-helpful-yes\" data-type=\"button\" data-location=\"article-bottom\" data-position=\"banner\" data-text=\"Yes\" data-outcome=\"response submitted\"><br \/>\n                <span class=\"Icon\"><default:svg xmlns=\"http:\/\/www.w3.org\/2000\/svg\" class=\"Icon-glyph\" viewbox=\"0 0 24 24\" fill=\"currentColor\" focusable=\"false\"><default:title>Thumbs Up Icon<\/default:title><default:path d=\"M13.165 2.175c.322 0 .57.022.774.065.796.161 1.43.624 1.85 1.345.71 1.216.722 3.067.023 5.499h.516c2.28 0 3.422 0 4.337.548a3.844 3.844 0 0 1 1.721 2.25c.29 1.032 0 2.13-.592 4.336l-.516 1.926c-.312 1.151-.484 1.786-.882 2.324a3.368 3.368 0 0 1-1.442 1.098c-.625.247-1.28.248-2.475.248l-.021.01h-4.595c-.42 0-.636 0-.84-.032a4.19 4.19 0 0 1-.635-.15c-.204-.065-.387-.162-.763-.355l-1.69-.856c-.014.034-.026.069-.043.102a2.334 2.334 0 0 1-1.044 1.044c-.495.247-1.012.248-1.948.248h-.161c-.936 0-1.453 0-1.947-.248a2.333 2.333 0 0 1-1.044-1.044C1.5 20.038 1.5 19.52 1.5 18.585v-7.683c0-.936 0-1.452.248-1.947A2.387 2.387 0 0 1 2.792 7.91c.494-.248 1.01-.247 1.947-.247h.16c.937 0 1.454 0 1.95.247.353.177.653.44.875.763.64-.606 1.788-2.184 3.31-5.142.183-.366.312-.603.538-.819.193-.193.462-.355.72-.441.302-.097.539-.097.873-.097ZM4.739 9.288c-.624 0-1.076 0-1.227.076a.721.721 0 0 0-.323.322c-.075.15-.075.603-.075 1.216v7.683c0 .624 0 1.076.075 1.227.065.14.183.248.323.323.151.075.603.075 1.227.075h.16c.625 0 1.078 0 1.228-.075a.722.722 0 0 0 .323-.323c.075-.15.075-.603.075-1.227v-7.683c0-.624 0-1.065-.075-1.227a.672.672 0 0 0-.323-.322c-.15-.075-.603-.076-1.227-.076h-.161v.01ZM13.057 3.8c-.14 0-.226 0-.259.011-.032 0-.086.043-.107.064a2.98 2.98 0 0 0-.226.399c-2.187 4.272-3.53 5.647-4.33 6.092.003.162.004.34.004.536v7.82l2.217 1.122c.28.14.42.216.56.27.107.032.214.064.332.075.151.021.314.021.626.021h4.594c1.022 0 1.539 0 1.862-.129a1.84 1.84 0 0 0 .763-.58c.215-.28.355-.808.613-1.765l.517-1.927c.495-1.85.775-2.873.603-3.475a2.309 2.309 0 0 0-1-1.313c-.538-.323-1.594-.323-3.51-.323h-1.129c-.226 0-.473 0-.72-.15a1.087 1.087 0 0 1-.464-.614c-.075-.301 0-.528.076-.754.957-2.97.603-4.26.301-4.777-.183-.312-.44-.506-.774-.57-.14-.033-.377-.033-.549-.033Z\" class=\"icon-base\"\/><\/default:svg><\/span> <span class=\"text-base leading-4\">Yes<\/span><br \/>\n            <\/button><br \/>\n            <button type=\"button\" class=\"HelpfulCTA-btn HelpfulCTA-btn--no border-2 border-blue-600 text-blue-600 rounded px-6 py-2 transition font-semibold flex items-center gap-2 hover:bg-blue-50\" data-cta-no=\"\" data-beam-element-clicked=\"\" id=\"did-you-find-this-helpful-no\" data-type=\"button\" data-location=\"article-bottom\" data-position=\"banner\" data-text=\"No\" data-outcome=\"response submitted\"><br \/>\n                <span class=\"Icon\"><default:svg xmlns=\"http:\/\/www.w3.org\/2000\/svg\" class=\"Icon-glyph\" viewbox=\"0 0 24 24\" fill=\"currentColor\" focusable=\"false\"><default:title>Thumbs Down Icon<\/default:title><default:path d=\"M19.26 2.175c.936 0 1.454 0 1.949.247.452.226.818.592 1.044 1.043.247.495.248 1.012.248 1.948v7.678c0 .936 0 1.453-.248 1.948a2.333 2.333 0 0 1-1.044 1.042c-.495.248-1.013.248-1.95.248h-.16c-.937 0-1.454 0-1.95-.248a2.33 2.33 0 0 1-.885-.777c-.637.596-1.79 2.176-3.314 5.155-.183.365-.312.602-.538.828a1.924 1.924 0 0 1-.722.441c-.258.086-.484.097-.742.097l.022-.011a5.39 5.39 0 0 1-.905-.064 2.741 2.741 0 0 1-1.852-1.345c-.71-1.216-.721-3.066-.022-5.496h-.516c-2.283 0-3.424 0-4.34-.548a3.843 3.843 0 0 1-1.722-2.248c-.29-1.033 0-2.13.593-4.324l.517-1.925c.312-1.162.484-1.786.882-2.323.377-.495.872-.871 1.443-1.097.624-.248 1.281-.248 2.476-.248h4.597c.42 0 .635 0 .84.032.215.032.431.086.636.15.193.065.387.162.753.345l1.702.864c.017-.04.033-.082.053-.122a2.333 2.333 0 0 1 1.044-1.043c.496-.247 1.013-.247 1.95-.247h.16ZM7.503 3.798c-1.022 0-1.54 0-1.862.13-.302.118-.56.322-.765.58-.215.28-.345.775-.614 1.753l-.517 1.926c-.495 1.85-.775 2.871-.602 3.474a2.308 2.308 0 0 0 1 1.312c.539.323 1.594.322 3.51.322h1.142c.236 0 .473 0 .72.15.227.14.388.367.453.625.075.28 0 .516-.075.742-.959 2.969-.603 4.27-.301 4.775.183.312.44.506.774.57.162.033.41.033.572.033.128 0 .203 0 .236-.01.021 0 .085-.044.107-.065.032-.032.14-.237.227-.399 2.208-4.308 3.556-5.671 4.352-6.102a39.945 39.945 0 0 1-.003-.523v-7.79L13.63 4.175c-.28-.14-.41-.215-.56-.27a1.796 1.796 0 0 0-.344-.085c-.151-.022-.313-.01-.625-.022H7.503Zm11.596.001c-.625 0-1.077 0-1.228.076a.72.72 0 0 0-.323.322c-.075.15-.075.603-.075 1.226v7.68c0 .623 0 1.075.075 1.226.075.14.183.247.323.322.15.075.603.075 1.228.075h.16c.625 0 1.078 0 1.228-.075a.778.778 0 0 0 .324-.322c.075-.151.075-.603.075-1.227V5.423c0-.623 0-1.076-.075-1.226a.722.722 0 0 0-.324-.322c-.15-.076-.603-.076-1.227-.076h-.161Z\" class=\"icon-base\"\/><\/default:svg><\/span> <span class=\"text-base leading-4\">No<\/span><br \/>\n            <\/button>\n        <\/div>\n<\/p><\/div>\n<p>    <!-- Yes Form --><\/p>\n<p>    <!-- No Form --><\/p>\n<div class=\"HelpfulCTA-thankyou flex flex-col items-center gap-2\" data-cta-thankyou=\"\" style=\"display:none;\">\n<p>Thank you for your<br \/>\n            feedback!<\/p>\n<p>Your input helps us improve our<br \/>\n            content and services.<\/p>\n<\/p><\/div>\n<\/div><\/div>\n<p>Read the full article <a href=\"https:\/\/www.bankrate.com\/loans\/personal-loans\/unsecured-loans-definition\/\" target=\"_blank\" rel=\"noopener\" rel=\"nofollow\">here<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"<p>Image by GettyImages; Illustration by Bankrate Key takeaways Unsecured loans are debt products that do not require collateral but may come with higher interest rates and stricter credit requirements. There are various unsecured loans, including personal loans, student loans, and credit cards. When determining eligibility for an unsecured loan, lenders will consider factors such as<\/p>\n","protected":false},"author":1,"featured_media":22877,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[58],"tags":[],"class_list":{"0":"post-22876","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-homes"},"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v22.2 - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>What Is An Unsecured Loan And How Do They Work? | BudgetADirect<\/title>\n<meta name=\"description\" content=\"Image by GettyImages; Illustration by Bankrate Key takeaways Unsecured loans are debt products that do not require collateral but may come with higher\" \/>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/budgetadirect.com\/?p=22876\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"What Is An Unsecured Loan And How Do They Work? 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