Secured Loans
Secured loans are types of borrowing where you pledge an asset, such as a home or car, as collateral. This means that if you fail to repay the loan, the lender has the right to take the asset to recover their money. Because there’s less risk for the lender, secured loans often come with lower interest rates than unsecured loans, which don’t require collateral. Common examples include mortgages and auto loans. It's important to remember that while secured loans can be easier to obtain, they carry the risk of losing your asset if you default on payments.
Additional Insights
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Secured loans are types of borrowing where the borrower offers an asset, like a house or car, as collateral to the lender. This means if the borrower fails to repay the loan, the lender can take the asset to recover their money. Because the risk for the lender is lower, secured loans often come with lower interest rates compared to unsecured loans, which don’t require collateral. Common examples include mortgages and auto loans. Borrowers should carefully consider their ability to repay the loan, as failing to do so can result in losing the secured asset.