What is the difference between a secured loan and an unsecured loan?

What is the difference between a secured loan and an unsecured loan Introduction: The World of Loans Hello everyone! Welcome to our video on secured and unsecured loans. Loans are a fundamental aspect of the modern financial landscape, enabling individuals and businesses to achieve their goals. But when it comes to loans, it's important to understand the nuances. Today, we'll focus on secured and unsecured loans, two popular types that differ significantly in their structure and implications. Secured Loans: The Foundation of Collateral Let's start with secured loans. As the name suggests, these loans are 'secured' by collateral. Collateral is an asset that the borrower pledges to the lender as a form of guarantee. It could be real estate, a vehicle, or even valuable possessions. The presence of collateral provides a layer of security for the lender. In the event of default, the lender can seize and sell the collateral to recover the outstanding amount. This assurance often translates into lower interest rates for secured loans, making them an attractive option for borrowers.