2 Replies to “Why debentures are called unsecured loan?”

  1. I am not sure I completely understand your question, but i am going to take a stab at it anyway…….

    When you apply for a loan that is unsecured, it means that you just agree to pay it by giving your word. If you don’t pay, there is nothing of value that the bank can come to get, making this type of loan more risky then say a car loan. A car loan would be considered SECURED debt because if you refuse to pay, the bank can come get the car and resell it to get the money back that they loaned toyou for the car.

    Just because the bank gets the loan thru a bond (which i am not sure about that but for the purposes of this conversation, we will assume that is true), that bond still has to be repaid to keep the bank solvent.

  2. You are wrong!

    All Debentures are not necesarily UNSECURED and there are SECURED also.

    When Debentures are secured for repayment then these are SECURED.

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