Unsecured Note

Definition of 'Unsecured Note'


A loan that is not secured by the issuer's assets. Unsecured notes are similar to debentures but offer a higher rate of return with less security than a debenture.Such notes are also often uninsured and subordinated. The note is structured for a fixed period of time.

Investopedia explains 'Unsecured Note'


Companies sell unsecured notes through private offerings to generate money for corporate initiatives such as share repurchases and acquisitions. An unsecured note is not backed by any collateral and therefore presents the most risk to lenders (investors in the notes). Due to the higher risk involved, the interest rates on these notes are higher than with secured notes.


Filed Under:

comments powered by Disqus
Hot Definitions
  1. Mortgage Modification

    A permanent change in a homeowner's home loan terms that makes the monthly loan payments affordable.
  2. Leveraged Benefits

    The use – by a business owner or professional practitioner – of their company’s receivables or current income to secure a loan whose proceeds then indirectly fund a retirement plan.
  3. Direct Consolidation Loan

    A loan that combines two or more federal education loans into a single loan. A Direct Consolidation Loan allows the borrower to make a single monthly payment. The loan is facilitated by the U.S. Department of Education and does not require borrowers to pay an application fee.
  4. Through Fund

    A type of target-date retirement fund whose asset allocation includes higher risk and potentially higher return investments "through" the fund's target date and beyond.
  5. Last In, First Out - LIFO

    An asset-management and valuation method that assumes that assets produced or acquired last are the ones that are used, sold or disposed of first.
  6. American Dream

    The belief that anyone, regardless of where they were born or what class they were born into, can attain their own version of success in a society where upward mobility is possible for everyone. The American dream is achieved through sacrifice, risk-taking and hard work, not by chance.
Trading Center