Secured loan - All about
A secured loan is a debt in which the lender takeovers borrower's some asset like a car or house, in order to decrease the risk for the loan amount.
So, the debt is secured if the borrower defaults. If the borrower defaults, the creditor takes possession of the asset and he is authorised even to sell it in order to get some or full of the amount he lent to the borrower.
There are two purposes for a secured loan. First, the creditor is out of most of the financial risks involved because he is able to take the ownership of the property if the debt amount is not properly repaid.
Second, it is also advantageous for the debtors as debtor may receive loans on more favorable terms because he is giving solid guarantee to lender. Because, in case, he is not able to repay debt amount, the lender will not be any risk. So as lender is safe, so debtor may receive debt on more favourable terms and condition for debtor himself.
