A loan backed by collateral, such as a home or car, that the lender can seize if you default.
Because collateral reduces the lender's risk, secured loans typically come with lower interest rates than unsecured loans. Mortgages and auto loans are the most common examples; if payments stop, the lender can foreclose on the home or repossess the vehicle to recover the balance owed.
Not to be confused with: Unsecured loans, which have no collateral backing them and rely solely on the borrower's creditworthiness.
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