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Loans Without Collateral


Not all debt is equal. Some debt comes with built-in collateral— that is, something you can pay the debt with without digging into your pockets, while other debt does not. Debt without collateral usually comes with a higher APY, annual percent yield, meaning they will be more expensive long-term. Debt that does not come with collateral is usually for a service or good, like student loans or credit card debt. Usually debtors will have some backup plan in the case of a default, however, such as insurance or government backing.


  1. Collateral: Something you can pay back with instead of money.
  2. Debt without collateral has higher APY to protect investment.
  3. Student loans and credit card debt are examples without collateral.
  4. This debt can have insurance or government backing to reduce APY.