Which type of loan does not require collateral?

An unsecured loan is a type of loan that does not require collateral, meaning it is not backed by any asset that the lender could claim if the borrower defaults. Because there is no collateral involved, unsecured loans tend to come with higher interest rates compared to secured loans, which are backed by an asset such as a house or car. The absence of collateral means that lenders assess the borrower's creditworthiness more closely when determining eligibility, as they bear a greater risk.

In contrast, secured loans are directly tied to collateral, which provides a safety net for lenders. Conditional and guaranteed loans may involve specific terms or assurances but do not specifically indicate a lack of collateral in the same way that unsecured loans do.