Secured Loan
Quick Definition
A loan backed by collateral — an asset the lender can seize if you default.
Full Explanation
A secured loan requires you to pledge an asset (collateral) to guarantee the debt. Common secured loans in Canada include mortgages (secured by property), car loans (secured by the vehicle), and HELOCs. Because the lender has recourse to the collateral, secured loans typically offer lower interest rates than unsecured alternatives. If you default, the lender can seize and sell the collateral to recover the debt. Secured loans allow larger borrowing amounts and longer repayment terms compared to unsecured loans.
Related Terms
Unsecured Loan
A loan with no collateral — lenders rely solely on your creditworthiness.
Collateral
An asset pledged to secure a loan, which the lender can seize if you default.
Mortgage
A secured loan used to purchase real estate, with the property as collateral.
HELOC (Home Equity Line of Credit)
A revolving credit line secured by your home equity, up to 80% LTV.
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