We are independent & ad-supported. We may earn a commission for purchases made through our links.
Advertiser Disclosure
Our website is an independent, advertising-supported platform. We provide our content free of charge to our readers, and to keep it that way, we rely on revenue generated through advertisements and affiliate partnerships. This means that when you click on certain links on our site and make a purchase, we may earn a commission. Learn more.
How We Make Money
We sustain our operations through affiliate commissions and advertising. If you click on an affiliate link and make a purchase, we may receive a commission from the merchant at no additional cost to you. We also display advertisements on our website, which help generate revenue to support our work and keep our content free for readers. Our editorial team operates independently of our advertising and affiliate partnerships to ensure that our content remains unbiased and focused on providing you with the best information and recommendations based on thorough research and honest evaluations. To remain transparent, we’ve provided a list of our current affiliate partners here.

What are High Risk Unsecured Loans?

Jim B.
Updated May 17, 2024
Our promise to you
WiseGeek is dedicated to creating trustworthy, high-quality content that always prioritizes transparency, integrity, and inclusivity above all else. Our ensure that our content creation and review process includes rigorous fact-checking, evidence-based, and continual updates to ensure accuracy and reliability.

Our Promise to you

Founded in 2002, our company has been a trusted resource for readers seeking informative and engaging content. Our dedication to quality remains unwavering—and will never change. We follow a strict editorial policy, ensuring that our content is authored by highly qualified professionals and edited by subject matter experts. This guarantees that everything we publish is objective, accurate, and trustworthy.

Over the years, we've refined our approach to cover a wide range of topics, providing readers with reliable and practical advice to enhance their knowledge and skills. That's why millions of readers turn to us each year. Join us in celebrating the joy of learning, guided by standards you can trust.

Editorial Standards

At WiseGeek, we are committed to creating content that you can trust. Our editorial process is designed to ensure that every piece of content we publish is accurate, reliable, and informative.

Our team of experienced writers and editors follows a strict set of guidelines to ensure the highest quality content. We conduct thorough research, fact-check all information, and rely on credible sources to back up our claims. Our content is reviewed by subject-matter experts to ensure accuracy and clarity.

We believe in transparency and maintain editorial independence from our advertisers. Our team does not receive direct compensation from advertisers, allowing us to create unbiased content that prioritizes your interests.

High risk unsecured loans are loans that require no collateral for the lender but require the borrower to pay higher interest rates on the loan to compensate for this lack of collateral. These loans are usually taken up by people who have poor credit ratings and need fast money to pay off outstanding debts. The benefits of high risk unsecured loans for the borrower are that they are easy to obtain and there is no risk of losing a prized possession held by the lender as collateral. Unfortunately, the high interest rates can push the borrower into even more serious debt should he or she fail to make timely payments.

It is often very difficult for individuals who fall into a deep financial hole to dig themselves out. As their debt rises, financial institutions like banks become reluctant to lend them money for fear that there will be no repayment. If these people who are financially struggling do get a loan, it is often only after they put up their house, car, or some other cherished possession as collateral. For people like this, high risk unsecured loans may be a financial last resort.

The chief advantage of high risk unsecured loans is that they offer a borrower the opportunity to obtain large amounts of cash quickly without risking anything in collateral. Lenders who specialize in these loans require no collateral, which is why the loan is considered unsecured. Since these lenders also care little about the credit rating of a borrower, there is a high risk for them that the loan may not be repaid.

To compensate for this risk, lenders of high risk unsecured loans demand a much higher interest rate from borrowers when they repay the loan. These high rates are the method by which the lenders atone for the losses they might suffer from those who default. Lenders of this type of loan usually work in concert with collection agencies, so the borrower can't simply expect to default on the loan and get away with it.

If a borrower needs money quick and knows that he or she will be coming into some sort of money in the near future to help pay off the high interest rates, then high risk unsecured loans can be a wise financial move. Paying off the loans will also improve a person's credit rating so that future loans may be secured at better rates. The danger in these loans is that some borrowers use them as short-term solutions without considering the long-term ramifications. For such people, loans like this may adversely affect their already precarious financial situation.

WiseGeek is dedicated to providing accurate and trustworthy information. We carefully select reputable sources and employ a rigorous fact-checking process to maintain the highest standards. To learn more about our commitment to accuracy, read our editorial process.
Jim B.
By Jim B.
Freelance writer - Jim Beviglia has made a name for himself by writing for national publications and creating his own successful blog. His passion led to a popular book series, which has gained the attention of fans worldwide. With a background in journalism, Beviglia brings his love for storytelling to his writing career where he engages readers with his unique insights.
Discussion Comments
Jim B.
Jim B.
Freelance writer - Jim Beviglia has made a name for himself by writing for national publications and creating his own...
Learn more
WiseGeek, in your inbox

Our latest articles, guides, and more, delivered daily.

WiseGeek, in your inbox

Our latest articles, guides, and more, delivered daily.