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What is Secured Loan
Secured Loan is a loan secured by other assets owned by the debtor. From the creditor's point of view, such a loan is more secure, which is why secured loans usually have a lower interest rate than unsecured loans.

Secured Loan is a loan secured by other assets owned by the debtor. From the creditor’s point of view, such a loan is more secure, which is why secured loans usually have a lower interest rate than unsecured loans.

What can be pledged?

In principle, you can pledge any property (e.g. real estate) or property that is the subject of a loan (e.g. a car). Banks definitely prefer real estate, but in practice it is also possible to pledge financial assets (securities, bonds, stocks, etc.) or valuables. In some cases, a loan can also be secured by the stake in a company or personal property of the company’s owners.

What can be called a secured loan?

The most common forms of a secured loan are the following:

  • Mortgages (the real estate is used as collateral)
  • Leasing (the leasing company owns the subject of loan until the debt is paid back)
  • Investment loans (the lien is placed on the subject of investment)

Related terms and methods:

Related management field:

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Last update: 06.05.2018

Comments

Denise Gregory 6 months

Many people use secured loans because they need a certain amount of money. At the same time, if you need money urgently, you can use quick payday loans that help you to solve financial emergencies. If you own an asset, such as a house or car, secured loans are one way that you may be able to borrow money. They are a common option for people who need a large loan (for example, more than £ 10,000), a long term loan (for example, more than five years).

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