What Is A Secured Loan? β The 4 Most Common Types
Abstract
These loans are further bifurcated into two categories, secured loans, and unsecured loans. What Is A Secured Loan? It is a type of loan where the lender or the bank will keep an asset as collateral against the money that they lend to the borrower. Once the loan is disbursed to the borrower the borrower needs to repay the loan according to the terms set by the lender. II - Auto Loans: An Auto loan is also one of the common types of secured loan that many individuals opt for. If the borrower is unable to repay the loan, the lender will repossess the vehicle and sell it to cover the unpaid loan balance. What Is The Difference Between Secured Loan Vs Unsecured Loan? Secured Loan: A loan is backed by collateral which is an asset belonging to the borrower that the lender can seize if the borrower is unable to pay the loan obligations. Credit cards, personal loans, and student loans are a few of the most commonly used unsecured loans.