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What is a secured loan?

A secured loan is where the borrower pledges an asset they own, or are purchasing, as security for the repayment of their loan. If they stop making repayments on the loan the lender is able to take possession of the asset which will then be sold with the funds going towards the outstanding loan amount.

The most common types of secured loans are home loans and car loans, however depending on the lender any type of loan could be secured by an asset.

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