An unsecured loan is not secured against any of your personal assets. It is based on your credit rating as appose to assets. So the better your credit rating the better then chance of securing the loan.
Unsecured loans are normally used for smaller value purchases as appose to a secured loan. Normally products such as a car. Another reason for an unsecured loan is if you are not a homeowner. To gain a secured loan you have to have a property to secure the loan on.
These loans are acquired from a bank or another private lender and are paid back in regular instalments until the loan is then paid off. However, as the loan isn’t secured on any personal assets these kinds of loans tend to be at a higher interest rate. This can cause the overall payments to be higher also. With any unsecured loan, they are more widely available and easier to obtain.
However, non-payment will damage your credit rating. Also if payments are not kept up in time the lender can take court action to ensure repayments are then made. As well as this it would be a much lower maximum loan amount as it is much less secure for the lender.
IF YOU ARE THINKING OF CONSOLIDATING EXISTING BORROWING, YOU SHOULD BE AWARE THAT YOU MAY BE EXTENDING THE TERMS OF THE DEBT AND INCREASING THE TOTAL AMOUNT YOU REPAY.