Types of Secured Loans

Here are several examples of secured loans:

1. Mortgage Loans: When obtaining a mortgage to finance a home, you’re essentially securing a loan. The property being purchased serves as collateral, meaning if you fail to repay, the bank can repossess the house.
2. Vehicle Loans: Similar to a mortgage, when you borrow money to purchase a vehicle, the vehicle itself acts as collateral. If you default on payments, the lender can seize the vehicle.
3. Secured Credit Cards: Obtaining a secured credit card involves essentially taking out a secured loan, as you’re using your bank account as collateral. Failure to make payments can result in the bank accessing funds directly from your account.