How Do Secured Loans Work?
By John Winters A secured loan is just a generic term for a specific type of loan. It is secured because it gives the lender some sort of security that it will be repaid (other than the personal promise of the person who takes out the loan). If you are issued a secured loan, you are putting up property as collateral. This means that if you do not repay the loan, the lender is entitled to take the property to ensure that they get their money back. (Since you need property to apply for or receive a secured loan, it is also sometimes known as a homeowners loan.) One reason that people apply for secured loans, as opposed to other types of loans, is that secured loans usually carry a relatively low interest rate. This is because from the banks perspective the risk of issuing the loan is greatly decreased, as you are putting up collateral. Since risk and loan interest rates are directly proportional, lowering the banks risk tends to lower the interest rate of the loan. Of course, with a secu
