Secured Loan

Borrowing backed by a specific asset the lender can seize if you default.

A secured loan is tied to collateral — a house for a mortgage, a vehicle for car finance, cash for a secured credit card. Because the lender can recover the asset, rates are lower and approval easier than for unsecured borrowing. The trade is the asset itself: default costs more than a damaged credit record.

The secured loan carried a lower rate because the car itself backed the debt.