What is a Secured Loan?
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The first involves the borrower putting forward an asset of theirs, usually their house or property, as collateral for the loan. This means that should the borrower no longer be able to pay the loan, the lender can ‘possess’ the property and use its sale as a way of paying the debt.
The second is often referred to as Hire Purchase, whereby the consumer takes out a loan to purchase goods e.g. a car. If the borrower can no longer pay the loan, then it is the item they purchased that can be ‘repossessed’.
To find out more, take a look at our Secured Loan Debt page.