Secured loans are loans backed with something of value that you own. This is called collateral. Common examples of collateral include your vehicle or other valuable property such as jewelry.
If you’re approved for a secured loan, the lender will hold the title or deed to the collateral or places a lien on the collateral until you pay the loan off in full. If you do not repay the loan, the lender may take possession of the collateral and apply the proceeds of the sale of the collateral to the outstanding debt.
The borrowing limits for secured loans are typically higher than those for unsecured loans because of the presence of collateral Common types of secured loans include mortgages and vehicle loans.« Back to Glossary Index