What are some examples of unsecured loans
Unsecured loan is any loan that you don't provide an asset as a collateral for. Auto loans are usually secured - by the auto. If you don't pay off the car, it will be repossessed. Credit cards are a good example, personal/business loans are also usually unsecured, and you've pretty much covered it. Majority of loans, especially for large amounts, are usually given for a specific purpose (usually purchase of a large asset) and are secured. Some other unsecured loans that are common: "Auto loans are secured agains the car.  ""Signature"" loans, from a bank that knows and trusts you, are typically unsecured. Unsecured loans other than informal ones or these are fairly rare. Most lenders don't want to take the additional risk, or balance that risk with a high enough interest rate to make the unsecured loan unattractive." Unsecured loans are loans that have not been “secured” with any kind of collateral. For example, the bank does not have the ability to take your property or automobile if you stop making payments on an unsecured loan. These loans are sometimes referred “signature loans” due to the face your signature on the loan agreement is all that you deliver to the table. Unsecured loans are available in a variety of flavors.
"This does not seem, to me, to be a very good indication regarding the   risk of the person not paying their balances off. If you do not have a source of income then how are you going to repay your debt.  Not to mention there is recource for creditors to garnish wages.  That is not possible if you have no income.  The risk assessment is about the ability of the creditor to recover any moneys loaned and costs and still make a profit. For example, students have their parents pay them some pocket money to   cover for expenses, or a person might be working sporadically on   consulting gigs that do not have a fixed monthly or yearly component. Most credit card companies that are willing to issue to college students will allow you to include money from your parents in your income.  Credit card companies are looking for customers that will carry a balance and incur fees but be able to pay them.  These companies do not make money off of fees and interest that they do not collect.  As such, sporatic work increases risk. Is it possible for people to get approved for unsecured credit cards   if they don't hold (or have not held for some time) a job at the time   of application? I was able to while I was in college.  Though I did have a part time job.  If you can show that you have the ability to pay you can usually get a credit card if you do not have bad credit.  It will probably be high interest and have alot of fees some of them you will have to pay upfront.  But what you probably mean to ask is ""Is it possible to get a no cost unsecured credit card with out a reliable source of income?""  The answer to that is: probably not.  Even the ones that look like they are free probably have hidden fees." "Collateralized & Secured are interchangeable terms. Note the following two quotes from wikipedia (links below): ""A secured loan is a loan in which the borrower pledges some asset (e.g. a car or property) as collateral for the loan, which then becomes a secured debt owed to the creditor who gives the loan."" http://en.wikipedia.org/wiki/Secured_loan ""In lending agreements, collateral is a borrower's pledge of specific property to a lender, to secure repayment of a loan."" http://en.wikipedia.org/wiki/Collateral_%28finance%29 This website also uses the terms interchangeably: http://www.wisegeek.org/what-is-a-collateral-loan.htm Loan & Line of Credit are not interchangeable terms.  In a loan, you receive a one time disbursement & repay it over a fixed amortization schedule. (Think home mortgage) In a line of credit, you can pay back & re-borrow from your credit line as often as you need. (Think credit card or Home Equity Line of Credit)" I dunno.  Borrow $65,000 with zero collateral, string the lender along for 20+ years, then die?  Sounds like a great decision to me.  I wonder why a bank would ever take the other end of that lemon of a deal?  Oh, right... Proper enforcement of laws currently on the books that should have prevented a company like Citi from selling loans that violated their own underwriting standards would have knocked out a huge part of it. Banks would have been a lot less willing to give loans to people who couldn't afford them if they knew that they couldn't flip them on the secondary market. The loan is very likely to be syndicated, yes. I only state 7-10 because all of our loans to this point have been 7 year terms. And in many ways, this loan is just one of those loans, multiplied out in a modular sense. Apart from the reasons currently given (which have to do with personal relations), wouldn't a good reason to take the loan from the bank be to build up a credit history and/or improve your credit score? Lol GM and Chrysler unsecured bonds had terrible recoveries when they defaulted in 08. They sure as fuck weren't backed by the Treasury. The government just won't let the big automakers liquidate.  Perhaps a simple Google search before you pontificate next time? I think people are conflating two orthogonal sets of terms. Unsecured/secured and good/bad are not synonyms. Debt may be secured or unsecured. If I take a loan against a car or house it is typically secured, so the object is collateral against the loan. Bad debt in financial terms is a loan that is not expected to be recovered. A bank might write off a loan or a portion of a loan as bad debt if the borrower goes bankrupt or into administration for example. Both secured and unsecured loans may be considered bad debt. I think the context in which the question is being asked is how to distinguish between sensible and inadvisable borrowing. An extreme example of inadvisable borrowing would be to buy a PC on a store card. PCs devalue very quickly and a store card may charge 30% APR, so paying the minimum off each month would mean paying  more than twice the sticker price for a product that is now worth less than half the original borrowed amount. On the other hand, a 3% mortgage when borrowing less than 60% of the value of a property is a good bet from a lender's perspective, and would be a good debt to have (not as good as no debt, but better thhan a high APR one). I completely agree with requirements, like GPA.  I think that weeds some bad loans out, and is a much better version of tough love than non-dischargable debt once you are out of school.    The non-discharged debt problem is tough, and I think this aspect ties into the college cost inflation:  If you, as a lender, basically have a perpetual lien on someone because they can't discharge the debt, then you (lender) can  issue riskier loans, and more of them.  I haven't heard the term 'subprime loans' used to describe student debt, but I think the term is just as applicable to bad student creditors as it was to bad home creditors in the housing bubble.  There seems to be moral hazard involved for lenders that have non-discharge covenants, and so they lend, even after government lenders tell people 'no more.' Banks are audited, for obvious reasons. Their software is carefully audited and protected, also for obvious reasons. A branch manager can't normally bypass those without getting caught quite quickly. He might be able to issue himself a loan -- but it will have to be a loan that at least appears to conform to the bank's standards, and he'll have to pay it off just like any other loan. In some cases, especially but not only for subprime loans, they are actually testing whether you will lie to them. (Discovered this when working on a loan origination applicatíon for car dealers -- they explicitly did not want us to autocomplete some values because that might remind applicants that answers would be checked.) "From what I've heard in the past, debt can be differentiated between secured debt and unsecured debt.   Secured debt is a debt for which something stands good such as a mortgage on your house.  You have a debt, but that debt is covered by the value of an asset and if you needed to free yourself of the debt, then you could by selling that asset.   This is what is known as ""good"" debt.   Unsecured debt is debt that is incurred where the only thing that is available to pay it back is your income.  An example of this is credit card debt where you purchase something that couldn't be sold again to pay off the debt.   This is know as ""bad"" debt. You have to be careful about thinking that house debt is always ""good"" debt because the house stands good for it though.  The problem with that is that the house could go down in value and then suddenly your ""good"" debt is ""bad"" debt (or no longer secured).  Cars are very risky this way because they go down in value.  It is really easy to get a car loan where before long you are upside down.    This is the problem with the term ""good"" debt. The label makes it sound like it is a good idea to have that debt, and the risk associated with having the debt is trivialized and allows yourself to feel good about your financial plan.  Perhaps this is why so many houses are in foreclosure right now, people believed the ""good"" debt myth and thought that it was ok to borrow MORE than the home was worth to get into a house.  Thus they turned a secured debt into an unsecured debt and put their residence at risk by levels of debt they couldn't afford. Other advice I've heard and tend to agree with, is that you should only borrow for a house, an education and maybe a car (danger on that last one), being careful to buy a modest house, car etc that is well within your means to repay.   So if you do have to borrow for a car, go for basic transportation instead of the $40,000 BMW.  Keep you house payment less than 1/4th of your take home pay. Pay off the school loans as quickly as possible. Regardless of the label, ""good"" ""bad"" ""unsecured"" ""secured"", I think that less debt is better than more debt.   There is definitely such a thing as too much ""good"" debt!" As someone with a lot of student loan debt, I can relate - the first thing you should do is read the promissory note on your current loans - there might be information there you can use.  For govt loans (stafford, etc) made after July 1, 2006 the interest rate is going to be fixed and even a federal direct consolidation is not going to lower the rates themselves.  If anything, consolidation will just increase the repayment period, which means you'll end up paying more in the long run.   Most private Loans usually offer variable interest rates, which today are quite low. But unless your financial situation is very comfortable and stable, consolidating out of federally guaranteed loans into private loans might not be the best path.  You might lose options like deferment, forbearance, and maybe even things like a death benefit (if you die, your loans die with you). related - if you have a co-signer you don't get that death benefit! But refinancing into a variable rate private loan is going to push a lot of risk to you in terms of interest rate inflation, etc. Most financial professionals will agree that interest rates can only go up in the long run. Keep in mind, student loans are completely unsecured - meaning lenders are taking a fairly large risk in loaning money (and probably why the fed govt has to guarantee most of them).  I've heard of people borrowing against their home equity to pay down student loan debt - but I can't think of a reason you'd want to substitute secured for unsecured debt and possibly lose the loan interest tax deduction.  The bottom line is you're unlikely to find an alternative lending source at a lower interest rate for an unsecured student loan.  Another option may be the income based repayment plan. If you qualify, it caps student loan monthly payments at 15% of your discretionary income (discretionary is your income minus whatever the poverty threshold income amount is). And if that 15% doesn't even cover the interest on the loans, the govt picks up the tab for the difference (for up to 3 years). You have to re-qualify every year by sending in all sorts of documentation, but if you somehow stay on IBR for 25 years, your loans are then forgiven. Obviously the downside here is that you are probably paying little to no principal, but if you do the math and determine that your IBR payment would be next to nothing, and your current situation is barely paying interest-only... well, maybe IBR isn't a bad thing for a couple of years (or 25 if you think you will never have a larger income).   Personally, I went through all these options as well and decided that my best option was to just earn more money... a 2nd job or side project here and there helps me pay down the debt faster, and with less risk, than moving to private variable rate loans. Well, if you can get a loan for 3.8% and reliably invest for 7% returns, then you should borrow as much as you possibly can - the whole employment/existing loan situation doesn't even enter into it! But as they say, if something is too good to be true, it probably isn't (true). The 7-8% return are not guaranteed at all, but the 3.8% interest is. And while we're at it, 3.8% for an unsecured loan sounds pretty damn low, I would be really doubtful about that. I mean, why would the bank do that if they could instead invest the money for 7-8%? The bank depends on the laws of large numbers.  They don't need to make money on every customer -- just on average. There are several ways that zero interest makes sense to them: You asked about banks, and I don't think you see this last scheme in use very much by a bank.  Here's why.   First, customers absolutely hate it - and when you drop the interest bomb, they will warn their friends away, blow you up on social media, call the TV news consumer protectors, and never, ever, ever do business with you again.  Which defeats your efforts in customer acquisition.  Second, it only works on that narrow range of people who default just a little bit, i.e. who have an auto-pay malfunction.  If someone really defaults, not only will they not pay the punishment interest, they won't pay the principal either!  This only makes sense for secured loans like furniture or cars, where you can repo that stuff - with unsecured loans, you don't really have any power to force them to pay, short of burning their credit.  You can sue them, but you can't get blood from a stone.