Skip to Content

What is a secured debt? What is an unsecured debt?


You have a secured debt when you pledge some asset (e.g. property or a vehicle) as collateral for your loan. The debt is secured against the collateral, which means that in the event that you do not make your required loan payments, the creditor can take possession of the asset used as collateral. Most common types of secured debt is a mortgage-where your house is used as collateral for the loan to buy your house, and a car loan-where your vehicle is used as collateral for a loan to buy your vehicle.

An unsecured debt is essentially the opposite of a secured debt. It is a loan not secured by an underlying asset or collateral. Examples of unsecured debt include credit cards, medical bills and cash advances.

Share To: