A secured loan is a loan backed by collateral, an asset the lender can take if the loan is not repaid. A mortgage and an auto loan are common examples.
A secured loan is tied to a specific asset, called collateral, that the customer pledges as a guarantee of repayment. Because the collateral lowers the lender's exposure, secured loans can sometimes be issued for larger amounts or longer terms than comparable unsecured loans. Common examples include a mortgage backed by real estate, an auto loan backed by the vehicle being financed, and a title loan backed by a vehicle title the customer already owns. If a secured loan goes unpaid, the lender may have the right to take and sell the collateral, a process such as foreclosure or repossession. The opposite arrangement, with no pledged asset, is an unsecured loan.
