Secured
Loans
A secured loan is usually needed
when borrowing larger amounts to fund major purchases. A secured
loan is contingent upon the borrower providing "collateral"
to ensure repayment. For example, a popular secured loan is
a home equity loan.
To obtain a home equity loan, you must give
the lender rights in your home as collateral; a mortgage is
written against it. Likewise, with a car loan, you are using
the car as the collateral for the loan. In the case of default,
the lender can take possession of the vehicle.
Secured loans usually offer lower rates, higher
borrowing limits and longer repayment terms than unsecured
loans.
As the term implies, a secured loan means you
are providing "security" that your loan will be
repaid according to the agreed terms and conditions. It's
important to remember, if you are unable to repay a secured
loan, the lender has recourse to the collateral you have pledged
and may be able to sell it to pay off the loan.
Examples of Secured Loans:
- Home Equity Loan
- Home Equity Line of Credit
- Car Loan (New and Used)
- Boat Loan
- Recreational Vehicle Loan
- Home Improvement Loan
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