What does uninsured loan mean?

An uninsured loan is a type of loan that is not backed by collateral or any form of insurance, meaning that the lender does not have a guarantee of repayment in the event of default. These loans typically come with higher interest rates to compensate for the increased risk taken by the lender. Borrowers may be required to demonstrate strong creditworthiness to qualify for such loans, as they pose a higher risk for lenders.