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 it in order to obtain sufficient funds to be repaid.

Related Courses

Corporate Cash Management 
Corporate Finance 
Treasurer's Guidebook