What is a secured loan? 

A secured loan is a loan backed by collateral. When you borrow money, the lender may or may not require you to pledge collateral to guarantee repayment of the debt. If collateral is pledged, then you have a secured loan. Collateral can be anything of value. (It can be money, real estate, automobiles, future interests, personal belongings, business assets, livestock, or anything else that has worth.) If you do not repay what you borrow, then the lender may use your collateral to satisfy the debt. For instance, your home mortgage is a secured loan. When you attended the closing, you signed a promissory note. This was your promise to repay the loan amount. You also signed a mortgage. This was your pledge of collateral. If you fail to make payments on the loan, the bank can foreclose on (take) and resell your home. If the bank sells your home, the sale proceeds are used to satisfy the loan. Other typical kinds of secured loans include car loans, boat loans, home equity loans, margin accounts, and retail store charge agreements.