What aspect primarily determines the terms of an unsecured loan?

The terms of an unsecured loan are primarily determined by the borrower's credit history and application. This is because unsecured loans do not require collateral, which means the lender is taking on more risk. Therefore, the lender assesses the borrower's creditworthiness to evaluate their ability and likelihood of repaying the loan. A strong credit history indicates responsible credit management and timely repayments, making the borrower more attractive to lenders. This influences the terms offered, such as interest rates and repayment periods.

While assets might provide insight into a borrower's financial stability, they do not directly impact unsecured loans since no collateral is involved. Lender profit margins are more concerned with the overall cost structure and risk assessments rather than individual loan terms. Lastly, while the economy's inflation rate can influence interest rates broadly, it is not the primary factor for determining the terms of a specific unsecured loan related to an individual borrower. Therefore, the credit history and application details are crucial in shaping the terms of such loans.