Secured Loan
A secured loan is a loan that is backed by collateral, such as a house, car, or other asset. This type of loan is often used by borrowers who have bad credit or who need to borrow a large amount of money. The collateral serves as a guarantee that the lender will be repaid if the borrower defaults on the loan. Secured loans typically have lower interest rates than unsecured loans, making them a more attractive option for borrowers.
History of Secured Loans
The concept of secured loans dates back to ancient times, when people would use their possessions as collateral for loans. In the modern era, secured loans have become more common, with banks and other financial institutions offering them to borrowers. Secured loans are often used to finance large purchases, such as a car or home, or to consolidate debt. They can also be used to fund business ventures.
Comparison of Secured and Unsecured Loans
| Type of Loan | Interest Rate | Collateral Required |
|---|---|---|
| Secured Loan | Lower | Yes |
| Unsecured Loan | Higher | No |
Summary
Secured loans are a type of loan that is backed by collateral, such as a house, car, or other asset. They typically have lower interest rates than unsecured loans, making them a more attractive option for borrowers. For more information about secured loans, you can visit websites such as Bankrate.com, Credit Karma, and NerdWallet.
See Also
- Unsecured Loan
- Debt Consolidation
- Mortgage
- Home Equity Loan
- Car Loan
- Personal Loan
- Business Loan
- Credit Card
- Line of Credit
- Payday Loan
