Unsecured Loan

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A loan made by a lender when there is nothing for the lender to hold as collateral in case the borrower fails to pay the money back. With an unsecured loan, all the lender usually gets is a promissory note. This makes it a riskier proposition for the lender than a secured loan. Sometimes the lender will ask for someone to cosign the promissory note. If the borrower defaults, the lender can then pursue the cosigner to get its money back.