What Is A Secured Car Loan
Secured vs. Unsecured Loans
A secured loan is a loan that is taken with
collateral offered in exchange for the loan. In many cases, the
collateral is the actual item that the loan is being taken on. For
example, collateral for a home loan is the home itself. If the borrower
fails to meet the terms of the loan, then the home is placed in
foreclosure and the mortgage lender takes possession of the home. The
same is true for auto loans in many cases. The collateral for the loan
is the vehicle that the loan is taken on. If the borrower fails to make
the agreed-upon payments, the vehicle is then repossessed by the lender.
What Is A Secured Car Loan
Unsecured loans on the other hand, are loans that are offered without
any collateral offered in exchange. Examples of unsecured loans include
most personal loans, student loans and credit cards.
What Is A Secured Car Loan
If the borrower
fails to make the payments and meet the terms of the loan, the lender
then has little recourse except to attempt to collect the loan through a
collection agency or to sue for the balance owed to the lender by the
borrower.
What Is A Secured Car Loan
