Question

As they are usually for smaller sums, and borrowed over fewer months or years, short term loans tend to be unsecured.

• A. True
• B. False

Answer 1

The correct option is A True

Unsecured loan is a loan that is issued and supported only by the borrower's creditworthiness, rather than by any type of collateral. Because unsecured loans, sometimes referred to as signature loans or personal loans, are obtained without the use of property as collateral, the terms of such loans, including approval and receipt, are most often contingent on the borrower's credit score. Borrowers must generally have high credit ratings to be approved for certain unsecured loans.
Therefore short term loans are issued on the basis of creditworthiness not on the basis of collateral security hence short term loan are unsecured.