What counts as collateral for a secured loan?

What counts as collateral for a secured loan?

Many or all of the products here are from our partners that pay us a commission. It’s how we make money. But our editorial integrity ensures our experts’ opinions aren’t influenced by compensation. Terms may apply to offers listed on this page.

A secured loan is a loan “backed” by collateral — such as a vehicle or house — that the lender can take if you don’t pay the loan. Secured loans can be easier to qualify for and generally have lower interest rates. Here, we’ll discuss what a secured loan is, when it’s a good idea to take one out, and the risks associated with this type of loan.

Definition of a secured loan

A secured loan https://paydayloansohio.net/cities/reading/ is a loan that you get by putting up collateral, like a car or a home. If you miss payments, the lender can sell your collateral to pay back the loan.