Secured loans can be taken for various reasons depending upon the specific requirements of the borrower. Borrowers opting for a secured loan try to extend their loan by securing their debt as the lender is relieved of most of the financial risks involved. Lenders feel secured as the collateral works as a security and in any default on payment, they can go for foreclosure or repossession.
Secured loans are a loan where the borrower pledges real estate as security or collateral to get the loan. It then becomes a secure loan for the lender as he is secured through the collateral that they will be able to get the borrowed money back. As the debt is secured against the collateral, in any event when the borrower defaults, the creditor may take the possession of the asset used as collateral.
Another advantage of secured loan is that borrowers can get a loan at an attractive rate from lenders after offering some real estate as security. Bad credit secured loans have low interest rates in comparison to unsecured loans which can work as a major motivation for a borrower to opt for a secured loan. Moreover, the payment period may be a convenient one in secured loan and borrower can agree for suitable time.