Secured loans are a type of borrowing where the borrower pledges an asset as collateral to secure the loan. This collateral can be real estate, vehicles, savings accounts, or other valuable assets. Because the lender has the assurance of the collateral, secured loans often come with lower interest rates and higher borrowing limits compared to unsecured loans. Common types of secured loans include mortgages, auto loans, and home equity loans. If the borrower defaults on the loan, the lender has the right to seize the collateral to recoup the outstanding balance. Secured loans are a viable option for individuals looking to borrow larger amounts of money or seeking more favorable loan terms, provided they have suitable assets to use as collateral.
