The
loans which have a protection by an asset or collateral are named as secured
loans. A purchased item, a house for example, is able to be used as collateral.
The bank has the rights of this collateral until the repayment is made in full.
Other kinds of personal property, like bonds, can be used to secure a loan.
Those kind of loans are generally used to obtain quick money as the loan
process is shortened through the guarantees made by the borrower. As the
promises are made for highly valuable assets, lender is more likely to believe
that borrower will do whatever he needs to keep it.
Secured
loans do not have to be for purchasing purposes. They can be home equity loans,
second mortgages or home equity lines of credit.
A
kind of secured loans is debt consolidation loans which use a personal property
as collateral. It reduces the number of payments, even to a single payment per
month. As secured loans have lower
interest rates compared to other kinds of loans, the borrower will save money. Those kind of loans has lower
monthly payments most of the time. The loans in which there are no collateral
involved are called unsecured loans and they demant higher interest rates as
lender makes a riskier move giving such a loan. In a situation of rejection for
an unsecured loan, you can have a secured loan.
loan 
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