Unsecured personal loans are loans that are approved without the need for collateral. Instead of pledging assets, borrowers qualify based on their credit history and income. Lenders do not have the right to take physical assets (such as a home or vehicle) if borrowers stop making payments on unsecured loans.
These loans are also known as “signature loans” because your signature on the loan agreement is all that you bring to the table. You promise to repay, but you don’t back up that promise by pledging collateral. “Personal” loans, available from banks, credit unions, and online lenders are unsecured loans you can use for any purpose you want.