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Security Interests

A security interest is a legal claim that a lender has on a borrower's property or assets as collateral for a loan. If the borrower fails to repay, the lender can take possession of the collateral to recover their money. This can apply to various assets, like a car, house, or business equipment. Security interests help protect lenders by reducing their risk, ensuring they have a way to recoup losses if the borrower defaults on the loan. They are often documented through contracts and must be properly filed to be enforceable against third parties.

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    Security interests are legal rights that a lender has over an asset provided by a borrower as collateral for a loan. This means if the borrower fails to repay the loan, the lender can take the asset to recover their money. Common examples include mortgages on homes or car loans. The borrower remains the owner and can use the asset, but the lender has a claim to it if the loan isn't repaid. This arrangement protects the lender's investment while giving the borrower access to funds they need.