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Secured Party

A secured party is an individual or entity that has a legal interest in collateral to secure a debt or obligation. This arrangement typically arises in loans, where a lender (the secured party) uses a borrower’s asset—like a car or property—as security. If the borrower fails to repay the loan, the secured party has the right to take possession of the asset to recover the outstanding debt. This concept helps protect lenders, ensuring they have a means to recover their funds if the borrower defaults.

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    A secured party is an individual or organization that has a legal interest in a debtor's asset to guarantee repayment of a loan or debt. When a borrower takes out a loan and uses collateral (like a car or equipment), the lender becomes the secured party. This means they have the right to take possession of the collateral if the borrower fails to repay the loan. The secured party's interest is typically recorded in public documents to ensure that their claim is recognized and prioritized over other creditors in case of default.