If borrower defaults on an unsecured loan lender cannot repossess goods, but has to resort to other legal remedies to recover capital, interest and costs.

You should usually borrow as little as possible, and draw up a budget plan to determine how much you need. An unsecured loan might not offer a particularly high amount, so if you're a homeowner and need to borrow more, you could look into secured loans.

Unsecured loans are invariably more expensive than secured loans because lenders have no guarantee that you can repay loan, and therefore charge you more in interest to cover cost of insurance policies that they need to take out to protect them should you default on repayments.

In event that a borrower does not pay up, lender will invoke terms of legally-binding credit agreement and pursue borrower through legal system.

Lenders are obliged by law to tell you how much they charge for this type of finance and this is worked out as an annual percentage rate (APR). Ask whether APR figure quoted is 'typical' or is what every applicant is charged.

Check whether there is an early repayment penalty.

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The taxpayer database maintained by IRS contains incredibly valuable information. The hacks of Choicepoint and LexisNexus pail in comparison to a hack of IRS database. Imagine a hacker getting access to tax identification numbers of every person and business in United States. Making matters worse, database also contains name and number of every account kicking out interest and dividends for each taxpayer including bank accounts and investment accounts. The exposure of such information would be a windfall for identity theft scams.

The IRS has responded to study by sending an email to all employees alerting them of rules regarding divulging information. You have to wonder how long employees will keep it in mind.