Unsecured Loan
Quick Definition
A loan with no collateral — lenders rely solely on your creditworthiness.
Full Explanation
An unsecured loan requires no collateral. The lender relies entirely on your credit score, income, and financial history to assess risk. Because there is no collateral to claim in the event of default, unsecured loans typically carry higher interest rates than secured loans. Credit cards, personal lines of credit, and student loans are common types of unsecured credit in Canada. Unsecured loan rates in Canada typically range from 6.99% to 46.96% for personal loans, and up to 19.99% for credit cards.
Related Terms
Secured Loan
A loan backed by collateral — an asset the lender can seize if you default.
Credit Score
A 3-digit number (300–900) indicating your creditworthiness to lenders.
Personal Loan
An unsecured or secured loan for personal use, repaid in fixed monthly installments.
Credit Card
A revolving credit facility allowing purchases up to a limit, with a standard 19.99% interest rate.
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