Which is an example of an unsecured revolving loan?
student loan
credit card
auto loan***
home mortgage
No. The auto loan is secured by the car. If a person fails to make payments, the company reposses the car,
Is it Student Loan? That seems to be the only one. Or is it a credit card?
Now look at the word revolving. What does that mean?
Ahhh, okay. So My answer is a credit card.
Yes, a credit card.
To find an example of an unsecured revolving loan, we need to understand what an unsecured revolving loan is.
An unsecured revolving loan is a type of loan that is not backed by collateral, meaning it does not require any assets or property to secure the loan. This type of loan allows borrowers to draw funds up to a certain limit and make payments over time.
Out of the options you provided - student loan, credit card, auto loan, and home mortgage - the example of an unsecured revolving loan would be a credit card.
A credit card is considered an unsecured revolving loan because it does not require any collateral. When using a credit card, the borrower can make purchases up to a predetermined credit limit and then repay the borrowed amount over time. The available credit limit gets replenished as the borrower makes payments, allowing them to continue making purchases as long as they don't exceed the credit limit.