Understand Secured and Unsecured Personal Loans (Forbrukslån)


As soon as you decide to shop for personal loans, you can find two essential types that will provide you peace of mind. We are talking about unsecured and secured personal loans. Similarly, as the name suggests, a secured personal loan requires collateral or security you can use to get the lump sum you wanted in the first place.

It is vital to remember that a bank or lending institution can take your collateral in case you default, meaning it is a collateral that will help you obtain better interest rates than an unsecured option. On the other hand, unsecured ones do not require asset, meaning they will offer you a loan depending on your credit score.

Both options come with specific advantages and disadvantages. Still, the popularity of ones without placing an asset is increasing because most people have access to different options. Since numerous lending options are available, deciding the best depends on your preferences.


If you wish to get a higher loan amount or do not have a great credit score, you can use collateral to ensure the best course of action. Of course, the most popular options are car debt and mortgage.

Generally, they come with lower risks because lending institutions can take an asset you place as collateral to get back the money they borrowed. At the same time, you will get a lower interest rate, especially if you have a high credit score to back up your situation.

A combination of good credit and collateral will reduce overall expenses, meaning you can take money without paying hefty interest. The most common options for loans (forbrukslån uten sikkerhet) are:

  • Mortgages – We are discussing purchasing a household and using it as collateral throughout the loan’s life. Therefore, if you cannot repay the loan after a while, you will enter a point of foreclosure, meaning the lender will sell your home to get your money back. Of course, you can always refinance to get better terms and ensure lower monthly payments or interest rates.
  • Secured Credit Cards – If you have bad credit history and score, you can take advantage of a secured credit card, which will help you boost the score and take it to the next level. Therefore, you can use a cash deposit to place an amount between two and five hundred dollars, which will serve as collateral. At the same time, the amount you place will act as a credit limit. Of course, similarly to other credit card options, if you do not clear the monthly expenses and balance, you will end up with interest rates.
  • Car Loans – These options are perfect when purchasing a car, boat, or motorcycle. As a result, you will use the vehicle as collateral, meaning the lender can repossess your car if you do not pay for everything on time.
  • Secured Personal Loans – Finally, you can get a personal loan, which is an effective solution for people who want to reduce their interest rate and have a good credit score. On the other hand, if you do not have a good credit score and still need a lump sum for emergency expenses or home maintenance, we recommend you place your savings account as collateral, which will provide you peace of mind.


  • Higher borrowing limit than other options
  • Lower interest rates
  • Less problematic eligibility due to collateral


  • If you default on the loan, the lending institution will seize your collateral
  • The inability to repay will affect your credit score


When it comes to unsecured loans, they do not require collateral, meaning your credit score will be the only measurement of the amount and interest you will get. At the same time, failing to pay will affect your score, mainly because the lender can send the debt to a collection agency.

The most common types of debts without collateral are:

  • Personal Loans – We can call them installment or term debt because you will get a fixed period and interest rate for repaying them in monthly installments.
  • Revolving – You can also use options where you can take and repay repeatedly the money you need. The most common ones include credit cards and personal lines of credit.
  • Student Loans – Finally, education debt does not require placing assets and credit history, meaning you can rest assured and repay after you obtain a degree and get a job.


  • A lender cannot take your belongings in the form of collateral in case you default
  • They come with lower borrowing limits


  • It is challenging to qualify for it
  • Defaulting may lead to severe credit damage
  • They feature high-interest rates than other options


The main difference between these options is collateral. Therefore, with the secured ones, you will offer a right to a lending institution to seize your asset in case you cannot repay the entire amount.

On the other hand, the unsecured option does not require assets, but you will still face the consequences after being unable to pay, meaning your credit score will plummet.