In lay parlance, an unsecured personal loan is personal loan having a fixed interest rate and requiring no collateral or security.
A financial crisis can come to anybody and at any time. In years passed, loan taking was more exception than norm. These days, the scenario is a lot different. There are a surfeit of lenders to choose from, each trying their their best to pull the customers. A homeowner can easily get a secured loan. However, for a tenant or a student, getting a secured loan is not possible. In this situation, an unsecured personal loan becomes the best and perhaps the only viable option.
With the absence of a physical guarantee as security, a borrower’s repayment ability is thoroughly checked by the loan officers. To counter the risk of loaning money to an unknown commodity, the lender expectedly charges a relatively higher rate of interest. The lack of collateral means that payback capacity of the customer is evaluated through:

• annual income,
  
• bank statements, and
  
• employment documents