If you are an adult, there is a good chance that you are aware of what a loan is. You might not have even ever taken out a loan, but you know that individuals often use loans to start businesses, pay off debts, or to make a big purchase. However, an unsecured loan is a loan that is given without collateral. This is different from many other loans, where you might have to give up something of yours in order to make sure that the loan is paid back. For example, it might be a valuable asset of yours - whether it's a car, jewelry, heirlooms, antiques, or more. However, an unsecured loan means that it isn't secure - or pegged to a particular asset.
An unsecured loan might also have different terms that involve you paying more than secured loan, since there is less security involved. The lender might feel as though he/she has the right to change the terms since they cannot legally take your physical assets to satisfy the loan. Since all you need is a signature on an unsecured loan, another name that is commonly used for them is signature loans. This is because all you truly need is a signature to obtain the amount of money that is designated. The signature is basically a promise, stating that you will repay the loan within a certain amount of time.
You might not think of it this way, but when you spend money with a credit card, it's pretty much like you are borrowing an unsecured loan. Other personal loans that involve banks might fit the definition, as well.
Of course, this does not mean that anyone can simply obtain these types of loans. In fact, lenders will pay extra attention to your credit and income to make sure that you can pay these types of loans back, because they have more to lose if you end up defaulting on the loan. If your credit and/or income isn't up to par, you might not even qualify. While there are still other options to consider, you might have to reconsider the amount of money that you plan on borrowing.
Of course, it's also important to remember to choose the loan that best fits for you. There are many other loans out there that might work for other people that might not fit your personality and situation. Keep this in mind for your next loan, no matter what the amount.