secured loans

 secured loans

 

A secured loan, is a loan in which the borrower pledges some asset (e.g. a car or property) as collateral for the loan, which then becomes a secured debt owed to the creditor who gives the loan.

What is the difference between a secured and an unsecured loan?

If you do not repay the loan, the lender has the right to take possession of the collateral and apply the proceeds of the sale of the collateral to the outstanding debt. The borrowing limits for secured loans are usually higher than those for unsecured loans because of the presence of collateral.

What is a home owner loan?

Homeowner loans are debts that are secured against your property and, as such, they are only available to homeowners with equity. These products could also be called secured loans, although technically the latter could be secured against another asset, such as a car.

What is a secured debt?

Secured debt is debt that is guaranteed by an asset. Common examples of secured debt are a mortgage and a car loan. The debt is considered secure or guaranteed because if you do not pay, the bank or lender can take your home or car. Thus, the home or car provides collateral.

What is meant by personal loan?

Definition: A personal loan is an unsecured loan, meaning the borrower does not put up any collateral or security to guarantee the repayment of the loan. For this reason, personal loans tend to carry high interest rates. If a borrower owns a home, a lower interest rate alternative is a home equity loan.