---
title: "Unsecured Loans: Things to watch out for"
description: An unsecured loan is a loan that is issued and supported only by assessing credit worthiness, rather than being secured by any property or asset. 
image: https://www.wealthstart.com.au/hubfs/Cutcher_Neale/Blog%20Images/finance%20images/small-business-finance-tips.jpg
---

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February 20, 2020

# Unsecured Loans: Things to watch out for

![authorIcon](http://www.sparkreaction.com/hubfs/Oceania%20Theme%202016/Images/authorIcon.png) By [Nick Carter, Partner, Medico Division](https://www.wealthstart.com.au/blog/author/nick-carter)

[![](https://www.wealthstart.com.au/hubfs/Cutcher_Neale/Blog%20Images/finance%20images/small-business-finance-tips.jpg) ](https://www.wealthstart.com.au/blog/blog-2019/unsecured-loans)

**An unsecured loan is a loan that is issued and supported only by assessing credit worthiness, rather than being secured by any property or asset. **

When you borrow to purchase a home or car, for example, the loan will likely be secured against the value of the property. This is called a mortgage, and provides the bank or lender with security such that if you fail to meet your repayment obligations, the lender can take possession of the security and sell it off to recover what you owe them.

Another form of finance is an unsecured loan. For our Doctors In Training we will often see examples of where the doctor has taken out a loan to cover some private expenses such as an end of year holiday. In these instances, the lender does not have anything to secure their investment against – giving rise to the term unsecured loan.

With unsecured loans it’s vital to be aware of all the conditions (hidden or not) as there are a lot of risks associated. When looking into unsecured loans you need to consider:

- High interest rates
- Additional setup and ongoing fees
- Repayment period
- Affordable repayments

It is important to be aware of your personal cash flow when considering a personal loan.

Talk to our team to discuss your personal budget and any savings goals you have.

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