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Secured Loan

Definition - What does Secured Loan mean?

A secured loan is a loan where the borrower uses his or her own assets as collateral in the event of default. In other words, in a secured loan, a borrower borrows an amount of money from a lender, but guarantees the transfer of ownership of a certain amount of his or her property to the lender if he or she fails to repay the loan.

Justipedia explains Secured Loan

The reason why secured loans are commonly used is because they decrease the risk to the lender. This is because the lender knows that he or she will automatically get his or her money back through the obtaining of assets if the borrower can't come up with the cash to repay the loan.

An example of a secured loan would be a man takes a $10,000.00 loan from a bank, and offers his car as collateral if he defaults.

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