Secured Transaction

A secured transaction is a financial agreement where a borrower provides collateral—an asset like a car or property—against a loan. This means if the borrower fails to repay, the lender can claim the collateral to recover their loss. Secured transactions help reduce risk for lenders, which can lead to lower interest rates for borrowers. Common examples include mortgages and car loans. The terms of these agreements, including what happens if a borrower defaults, are typically documented in a security agreement.