Secured Loan

A secured loan is a loan that requires collateral in order to borrow. That collateral can be physical property like a house or vehicle, or liquid assets such as cash. Lenders often ask for collateral for large loans, loans tied to a specific asset purchase, or when a borrower cannot qualify for an unsecured loan because of a weaker credit score.

It is a loan where you promise an asset, like a car or house, as backup. If you do not repay the loan, the lender can claim that asset.