Secured Loan
A loan backed by collateral (like a vehicle or property) that the lender can repossess if you default.
What You Need to Know
A secured loan uses an asset as collateral to guarantee repayment. If you fail to make payments, the lender can seize the collateral to recover their money.
Common Secured Loans:
- Auto loans: Vehicle serves as collateral
- Mortgages: Home serves as collateral
- RV loans: Recreational vehicle as collateral
- Home equity loans: Your home's equity as collateral
Advantages:
- Lower interest rates: Less risk for lender = better rates
- Higher loan amounts: Can borrow more with collateral
- Easier approval: Collateral reduces lender risk
- Longer terms: Can spread payments over more years
Disadvantages:
- Risk of repossession: Lose asset if you default
- Asset requirements: Must own valuable collateral
- Longer commitment: Secured loans often have longer terms
Camper Van Loans:
- Vehicle serves as collateral
- Typically 10-20 year terms
- Interest rates 6.5-15% depending on credit
- Professional conversion required for best rates
Sources & References
This information is sourced from authoritative government and academic institutions:
- consumerfinance.gov
https://www.consumerfinance.gov/ask-cfpb/what-is-a-secured-loan-en-101/
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