Unsecured loans are loans that are given without any collateral. This stipulates that the loan is not given to the borrower’s property. In the case of default, the lender can take back the fees that sell the collateral and take ownership. Unsecured loans and used to finance the purchase of a car are considered unsecured car loans.
This type of loan is a risky term for lenders because of a lack of collateral. Generally lending institutions try to examine the borrower’s credit history and sources of income to measure the probability of repayment of the loan. If you have a bad credit record, it will be difficult for you to get an unsecured car loan. Such loans have a high interest rate to provide compensation for risks to lenders.