SPG Seksi Hongkong A loan without collateral is a loan where the bank, or financial institution providing the loan, does not ask for any collateral. Usually when you borrow money to buy for instance a house or a car, your bank requires some sort of collateral for the loan. In these situations you use the house or the car as collateral. This allows the bank to secure their money when they are giving a loan. If the borrower are unable to pay off his debt on time, the bank take action to sell the valuable asset the borrower had to use as collateral. They sell the asset to get their money back. This is therefore a safety net to secure them self and their money. In cases where the bank gives a loan without collateral they don't have this security net. Of course the bank doesn't do this to be nice. They just want to attract more customers. To still make money they demands a higher interest rates on these loans. In Norway lenders that offer consumer loans without collateral usually demand interest rates between 10% and 30%. This is of course more expensive to the borrower, but they don't have to use any collateral.
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