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HelpWithDebtNow.com
Dec 16
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A lot of individuals get cornered into financial trouble every once in awhile. When those individuals run into financial trouble, they do not have anywhere to turn to, so they go for secured loans. Secured loans are out there for those individuals...
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more ▼WIKI ANALYSIS
WIKI ANALYSIS| This article is part of WikiProject Definitions. Consider editing to improve it. View articles referencing this definition. |
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A Secured Loan is a loan in which the borrower must offer some form of collateral (e.g. real estate, personal property, investment securities) to be forfeited should he default on the loan. This provides the lender with a layer of security diminishing the risk involved in offering the loan.
It should be noted that the lender's measure of safety is tied directly to the volatility of the collateral's value.
Examples
- A woman takes out a mortgage to pay for her home. As collateral, she offers the home itself. Should she default on the loan, the lender (typically a bank) would take possession of the home. The bank may then sell the property to recoup its losses.
- A man needs a cash loan to pay for several large, immediate expenses. As collateral, he offers the lender his car. Should he default on the loan the lender would take possession of the car, which he or she may sell to recoup losses.
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