Unsecured car loans are loans that do not include collateral presented by a borrower to back up the loan. Unsecured car loans are the norm for most buyers, as few have the collateral handy to back up a debt.

In an unsecured car loan, the lender finances the debt according to the "value" of the borrower instead of any of the borrower's collateral. What this means is that any unsecured loan will rest mainly on the buyer's credit history and specific FICO credit ratings. That's why it's a good idea for borrowers in unsecured auto loans to know their credit scores and use good credit to their advantage when getting financing deals from any lender.

Also, shopping around for loans is a good idea, since some lenders are more flexible on financing terms than others. Experts caution those in unsecured loans, including auto loans, not to take the first offer, but to look around for financing deals. For more information on unsecured car loans, check out our database of helpful articles and advice.