A secured loan is a type of loan that is backed by collateral

A secured loan is a type of loan that is backed by collateral—something valuable that you own, like a car, house, or savings account. If you don’t repay the loan, the lender can take the collateral to recover their money.

Example:

• Mortgage = secured by your home
• Car loan = secured by the car you’re buying

Key Points:

• Usually offers lower interest rates because the risk is lower for the lender.
• If you default, you could lose your asset.