Scrutineer Country

An unsecured personal loan is a loan that has no pledge of property against it in case of default. In comparison, a secured personal loan is collateralized with property like a home or car that would be forfeit if the conditions of the loan are not met. But an unsecured personal loan allows the lending party to go after all the assets of the borrower if there is a default.

Along with the unsecured personal loan, there are many different types of unsecured debt available from banks and financial institutions: credit cards, bank overdrafts and lines of credit. If you’re a student, you can get an unsecured student loan if you have no collateral or have trouble with credit. As you might imagine, and you may have experienced, an unsecured loan often comes with a fairly high interest rate. In fact, the rates have been rising, with some over 20%.

The economic downturn and credit crunch has made the unsecured personal loan and the student loan much more difficult to arrange. In fact, the Massachusetts student loan authority was forced to stop lending last year because of the tight credit market.

But at the beginning of April, the Governor of Massachusetts announced that $300 million was being made available for student loans for those attending college next year. This is particularly important for personal loans in Boston, which has dozens of colleges and more than 200,000 college students. Applications for the new low-cost, fixed rated student loan are already being taken. The loan carries an interest rate of 7.75%, far lower than an unsecured personal loan that might be arranged from a lending institution. Governor Deval Patrick said the purpose of this type of student loan was to make college education affordable and more accessible to Massachusetts students.