What Is A Secured Loan?

A secured loan is one made when the loan is pledged against the value of collateral, e.g. a car or more usually a home. If the person in debt cannot make the payments needed, the lender will then be able to take possession of the home and sell it to recoup their loan. This may then make the lender more likely to offer low interest rates and an extended payment plan to the debtor. For homeowners, a mortgage loan is the most common secured loan, using the home as collateral, and as a means of extending payment over a longer period of time. This is seen as the traditional way of renting a home without owning it outright, and allows for a mortgage to act as a secured loan. Secured loans are available from the majority of banks and building societies, while other companies offer advice and the opportunity to broker deals.