There are generally two types of consumer loans available: secured and unsecured. The primary difference between the two is the presence or absence of collateral , which backs the debt and serves as a form of security to the lender against non-repayment. What Are Secured Loans? Secured loans refer to those in which the borrower pledges an asset as collateral or security for the loan. A secure debt instrument means that the lender can sell the asset to recoup the funds advanced to the borrower in the event of default. The most common type of secured loan is a mortgage, in which the collateral is the mortgaged property. When a borrower takes out a mortgage, the property is used as collateral to secure the loan; the lender maintains an equitable interest in the property until the borrower repays the loan in full. If the borrower fails to make payments, the lender may repossess the property and sell it to recoup the funds owed. Likewise, if a borrower fails to make timely payments on...
This blog is a helpful guide with tips on securing funding for your small business, with insights into how to approach investors and secure loans.