Personal Loans

In finance, unsecured debt refers to any type of debt or general obligation that is not protected by a guarantor, orcollateralized by a lien on specific assets of the borrower in the case of a bankruptcy or liquidation or failure to meet the terms for repayment.

In the event of the bankruptcy of the borrower, the unsecured creditors will have a general claim on the assets of the borrower after the specific pledged assets have been assigned to the secured creditors. The unsecured creditors will usually realize a smaller proportion of their claims than the secured creditors.

In some legal systems, unsecured creditors who are also indebted to the insolvent debtor are able (and in some jurisdictions, required) to set-off the debts, which actually puts the unsecured creditor with a matured liability to the debtor in a pre-preferential position.

Under risk-based pricing, creditors tend to demand extremely high interest rates as a condition of extending unsecured debt. The maximum loss on a properly collateralized loan is the difference between the fair market value of the collateral and the outstanding debt. Thus, in the context of secured lending, the use of collateral reduces the size of the “bet” taken by the creditor on the debtor’s creditworthiness. Without collateral, the creditor stands to lose the entire sum outstanding at the point of default, and must boost the interest rate to price in that risk. Where high interest rates are consideredusurious, unsecured loans are either not made at all, or are made by loan sharks unafraid of the law.

Oftentimes Unsecured Loans are sought out in cases where additional capital is required although existing (but not necessarily all) assets have been pledged to secure prior debt. Secured lenders will more often than not include language in the loan agreement that prevents debtor from assuming additional secured loans or pledging any assets to a creditor.

Debt consolidation is a form of debt refinancing that entails taking out one loan to pay off many others.[1] This commonly refers to a personal finance process of individuals addressing high consumer debt but occasionally refers to a country’s fiscal approach to corporate debt or Government debt.[2] The process can secure a lower overall interest rate to the entire debt load and provide the convenience of servicing only one loan.[3]

USA

The United States of America (USA), commonly referred to as the United States (U.S.), America, and sometimes the States, is a federal republic[17][18] consisting of 50 statesand a federal district. The 48 contiguous states and Washington, D.C., are in central North America between Canada and Mexico. The state of Alaska is located in the northwestern part of North America and the state of Hawaii is an archipelago in the mid-Pacific. The country also has five populated and nine unpopulated territories in the Pacific and the Caribbean. At 3.80 million square miles (9.85 million km2)[4] and with around 318 million people, the United States is the world’s fourth-largest country by total area and third-largest by population. It is one of the world’s most ethnically diverse and multicultural nations, the product of large-scale immigration from many countries.[19]The geography and climate of the United States is also extremely diverse, and it is home to a wide variety of wildlife.[20]

The United States is a developed country and has the world’s largest national economy.[6] The economy is fueled by an abundance of natural resources and high worker productivity.[29] While the U.S. economy is considered post-industrial, it continues to be one of the world’s largest manufacturers.[30] The country accounts for 37% of global military spending,[31] being the world’s foremost economic and military power, a prominent political and cultural force, and a leader in scientific research and technological innovations.[32]