Secured loan

A secured loan is a lending agreement in which the borrower pledges an asset as collateral, which the lender can seize if the borrower cannot pay back the underlying loan. A secured loan protects the interests of the lender in situations where there is uncertainty regarding the ability of the borrower to pay back a loan. It can also be used to reduce the interest rate on a loan, since the lender’s risk has been reduced. In addition, a secured loan allows for the extension of funds to borrowers who might not otherwise qualify for a loan. For example, a home mortgage is a secured loan, since the lender can seize the home in the event of nonpayment, and sell the home in order to obtain sufficient funds to be repaid.