Definition of Unsecured debt:
Because unsecured loans are considered more risky for the lender, they generally carry higher interest rates than collateralized loans.
Debt offering (such as a bond, debenture, or promissory note) that is backed only by the reputation and creditworthiness of the issuer, but is not secured by any collateral security.
Unsecured debt refers to loans that are not backed by collateral. If the borrower defaults on the loan, the lender may not be able to recover their investment because the borrower is not required to pledge any specific assets as security for the loan.
How to use Unsecured debt in a sentence?
- They generally require higher interest rates, because they offer the lender limited protection against default.
- Unsecured debts are loans that are not collateralized.
- Lenders can mitigate against this risk by reporting defaults to credit rating agencies, contracting with credit collection agencies, and selling their loans on the secondary market.
Meaning of Unsecured debt & Unsecured debt Definition