Secured Loan

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This is when a lender makes a loan and as a precaution asks the borrower for something as collateral that the lender can keep if the borrower defaults. Here's an example: You want to borrow money from a bank to buy a car. The bank agrees, but to get the loan you have to agree to give the car to the bank if you can't repay the loan. The loan has therefore been "secured" using the car as collateral. The opposite of a secured loan is an unsecured loan, which means the loan is not backed up with any assets. Secured loans are also made by pawnbrokers and payday loan stores. See Recourse Loan.