A promissory note that can exist without a mortgage or collateral is called what?

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Study for the Burk Baker National Test. Use flashcards and multiple choice questions with hints and explanations to prepare effectively. Get ready for your exam!

Multiple Choice

A promissory note that can exist without a mortgage or collateral is called what?

Explanation:
Loans without collateral rely on the borrower's promise and credit rather than pledged assets. A promissory note like this isn’t tied to real estate or other collateral, so repayment depends on the borrower's creditworthiness and promise to repay. A signature loan is exactly that kind of loan: approved based on the borrower's signature and credit, with no collateral backing it. The other options involve collateral or property: a secured note or mortgage note requires collateral, and while an unsecured note describes the general idea, the term that directly names this specific type of loan in the list is signature loan.

Loans without collateral rely on the borrower's promise and credit rather than pledged assets. A promissory note like this isn’t tied to real estate or other collateral, so repayment depends on the borrower's creditworthiness and promise to repay. A signature loan is exactly that kind of loan: approved based on the borrower's signature and credit, with no collateral backing it. The other options involve collateral or property: a secured note or mortgage note requires collateral, and while an unsecured note describes the general idea, the term that directly names this specific type of loan in the list is signature loan.

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