GLOSSARY

Canadian Financial, Real Estate and Mortgage Glossary

How often this word is used
 
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38% - Moderately

Unsecured Debt


Synonyms:liability, not covered, unguaranteed
Filed Under: financial-banking
Tags: banking, debt
 

Definition of unsecured debt

unsecured debt
1. Debt that is not guaranteed by collateral is considered unsecured because there is no assurance for repayment. Most credit cards are unsecured debt, which is why the interest rates are higher than other forms of lending, such as mortgages, which use property as collateral.

Related Terms and Acronyms:

  • collateral   Any property pledged as security for repayment of a debt.
  • credit card (CC)   A plastic card with a coded magnetic stripe that, when signed, entitles its bearer to a revolving line of credit, with a credit limit and interest rate determined by the borrower's income and credit report.
      ➥  A payment card that gives customers access to a revolving line of credit.
  • grace period   If the credit card user does not carry a balance, the grace period is the interest-free time a lender allows between the transaction date and the billing date. The standard grace period is usually between 20 and 30 days. If there is no grace period, finance charges will accrue the moment a purchase is made with the credit card. People who carry a balance on their credit cards have no grace period.
  • personal loan   A loan made for personal, family, or household use as opposed to a business-type loan or a long-term mortgage loan to finance real estate.
  • secured debt   A debt that is secured by a lien on debtor's property that may be taken by the creditor in case of non-payment by the debtor. A common example is a mortgage loan.
  • unsecured loan   An advance of money that is not secured by collateral.

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