What is an example of a secured loan?

The most common examples of secured loans are mortgages or car financing. Essentially, secured loans can be used for any large-scale purchase with an asset acting as security on the loan.

Most secured loan examples will be a property mortgage. However, another form of secured lending is any large purchase acting as security on the loan.

For example, you could be buying a car, and it would act as security, making the finance a secured loan. The same goes for bikes, or anything with a high value.

• An asset, such as a car, will act as security against the loan, particularly if the loan is to purchase that asset.
• Failure to repay a secured loan may result in you losing that asset, as the lender uses it as security
• Secured lending may be used for loans of large sums – but you can borrow less
• Secured loans do not have to be secured against what you are purchasing. The security can be any object of high value, such as jewellery

Secured loans can extend beyond property and mortgages to other objects or financing.

Other examples of secured lending would include business loans, where office equipment or even machinery could act as security on the loan.

Debt consolidation loans, where you put multiple debts into one account, can be a use of secured lending. You would have an asset of value acting as security on the loan.