A loan obtained without collateral is called an unsecured loan

A loan obtained without collateral is called an unsecured loan

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Money borrowed without the security of collateral to back the loan is called an unsecured loan. Any person receiving an unsecured loan will agree to terms and interest charges for paying back the borrowed funds. By signing a document, the borrower is giving an oath to pay back the amount barrowed. A personal loan from a friend or family member is probably the simplest unsecured loan. Usually this type of loan is documented with a simple I.O.U. agreement to pay back the loan. However, this type of unsecured loan may turn out to be not only risky but damaging to friendships and relationships. Moreover, either party, as the borrower or the lender, may become unsatisfied with the rate or terms of the loan at anytime. In addition there is little recourse other than small claims court if there is an issue with the loan. Probably the most common type of unsecured loan is money borrowed from a credit card company. Use of a credit card represents an agreement to terms and rates set by the credit card company. Money
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This note was uploaded on 03/06/2010 for the course ART 121 taught by Professor Mack during the Spring '10 term at Academy of Design Tampa.

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