Secured loan
A loan backed by collateral, such as a car or savings, which usually earns a lower interest rate but puts the asset at risk.
With a secured loan, you pledge an asset that the lender can seize if you stop repaying. Because this collateral lowers the lender’s risk, the interest rate is often more favourable than on an unsecured loan.
The trade-off is real: if you default, you could lose the pledged asset, such as your vehicle. It is important to weigh your ability to repay before putting an asset on the line; our personal loan guide compares secured and unsecured options.