Unsecured debt relies only upon your promise to repay the debt.
Debt is not tied to any item or property. A creditor does not have the right to grab property to satisfy the debt if you default. The most common types of unsecured debts are credit cards, department store cards, medical bills, and personal (signature) loans.
A secured debt relies upon collateral.
Real property, personal property, fixtures, or a combination of both may secure repayment of debt. A debt that entitles the lender to confiscate a specified piece of property (the collateral) if the debtor cannot repay the secured debt. The most common forms of secured debt are home loans (mortgage or equity line-of-credit) and car loans.
The last kind of a "secured" debt is a student loan.
Student loans are loans offered to students to assist in payment of the costs of professional education. These loans usually charge lower interest rates then other loans, and are usually issued by the government.
The Difference Between Secured Debt and Unsecured Debt - To learn more about this author, visit Eric Pinola's Website.
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