What is a common example of an unsecured loan?

A line of credit from a credit card company is a common example of an unsecured loan because it does not require any collateral to secure the debt. When you use a credit card, the lender provides you with a revolving line of credit based on your creditworthiness, and your ability to repay the borrowed amount relies solely on your promise to pay, rather than on collateral like a house or a car.

In contrast, a mortgage is secured by the property being financed; if payments are not made, the lender has the right to seize the property through foreclosure. Similarly, an automobile loan is secured by the vehicle itself, meaning that the lender can take the car if the borrower defaults. A secured personal loan is also backed by collateral, which protects the lender in the event of default. Thus, among the options provided, a line of credit from a credit card company uniquely stands out as an unsecured borrowing solution.