An unsecured installment loan is financing not secured by a borrower's property that the borrower repays in monthly installments. Often referred to as personal loans, borrowers use installment loans for an array of purposes, such as large purchases and medical bills, according to eHow.
Unsecured installment loans often carry higher interest rates than certain credit cards, notes eHow. The borrower doesn't risk loss of property, as he would with a secured loan. However, lenders make credit decisions based on the credit worthiness of the borrower upon review of his credit history. Monthly installments include amounts paid toward the principal loan balance as well as interest charges.