ContractsCounsel Logo

Secured Loan

Clients Rate Lawyers on our Platform 4.9/5 Stars
based on 7,503 reviews

Jump to Section

Need help with a Secured Loan?

Post Project Now

A secured loan is a loan category supported by collateral, which can be an asset the borrower possesses to claim additional capital or other monetary benefits. The collateral functions as a safety for the lender, guaranteeing that if the borrower defaults on the loan repayment, the lender can seize the collateral to recover the outstanding debt. Moreover, standard forms of collateral comprise real estate properties, vehicles, savings accounts, or other valuable assets. This blog post will discuss a secured loan, its benefits, the process of obtaining it, and more.

Advantages of a Secured Loan

Secured loans offer borrowers expansive advantages, making them an attractive option for those needing substantial funds. Below are the critical benefits of Secured Loans, making them a wise lending option for borrowers.

  • Lower Interest Rates: Secured loans benefit borrowers from receiving lower interest rates than unsecured loans. By offering collateral, such as valuable assets or properties, borrowers lower the payment default risk for lenders. This reduced risk encourages loan lenders to provide more affordable terms, leading to cost savings throughout the loan duration.
  • Higher Loan Amounts: Secured loans allow borrowers to access more loan amounts than unsecured loans. The collateral the borrower provides serves as security for the lender, enabling them to extend higher loan limits. It is particularly beneficial for financing major expenses like purchasing a home, expanding a business, or covering substantial medical costs. Secured loans provide the necessary financial flexibility to address considerable funding needs.
  • Flexible Repayment Terms: Secured loans usually provide borrowers with higher flexibility regarding repayment provisions. Negotiating extended loan durations allows borrowers to spread their payment settlements over an extended period, reducing monthly installments. It makes it more manageable for borrowers to control their cash flow and effectively budget their finances. Moreover, secured loans often allow prepayments or early repayments without major penalties, enabling borrowers to save on interest costs by paying off the loan ahead of schedule.
  • Simplified Approval Process: Secured loans are generally easier to obtain, especially for people with less-than-perfect credit records or restricted credit limits. Since the collateral funds the loan, lenders are more ready to authorize applications from borrowers with lower credit scores. This accessibility makes secured loans viable for people aiming to rebuild their credit or establish a credit history.
  • Debt Consolidation: Secured loans can serve as a valuable tool for debt consolidation. Borrowers with numerous high-interest loans or credit card debts can use a secured loan to settle all their debts. By consolidating debts into a single loan, borrowers can simplify their financial obligations and benefit from lower interest rates. Additionally, it enables them to manage their debts more efficiently by having a single monthly payment.
  • Building Asset Value: Secured loans offer borrowers an opportunity to leverage their assets and build equity or increase the value of their assets. For example, obtaining a mortgage to purchase a property provides immediate financing. It allows borrowers to benefit from potential property appreciation over time. Similarly, business loans secured against assets can empower entrepreneurs to expand their operations, generate higher revenue, and enhance the value of their businesses.

Types of Secured Loans

Secured loans are a prevalent financing alternative that allows people and companies to borrow funds by providing collateral as security. This collateral reduces the lender's risk and offers safety, allowing borrowers to access more loan payments and profitable interest rates. Below are the types of secured loans available, each tailored to specific borrowing requirements.

  • Mortgage Loans: Mortgage loans are one of the most prevalent categories of secured loans. They are utilized principally for buying assets or real estate properties. The property borrower has purchased functions as collateral. Suppose the borrower fails to settle the loan repayment, the loan provider holds the authority to seize the property. Mortgage loans typically have extended repayment terms, often spanning decades, and come with affordable interest rates.
  • Auto Loans: Auto loans help people fund the purchase of a vehicle. The automobile is collateral for the loan, authorizing the lender to repossess it in case of a payment default. One can obtain auto loans through financial institutions, credit associations, or automobile dealerships. They usually come with set interest rates and repayment terms varying from a few years to several years.
  • Secured Personal Loans: Secured personal loans are an adaptable financing alternative for different purposes, such as house modifications, debt consolidation, or funding important expenditures. These loans need collateral, such as a certificate of deposit (CD), savings account, or other worthwhile assets. The interest payments and provisions for secured personal loans may differ depending on the loan provider and the borrower's creditworthiness.
  • Secured Credit Cards: Secured credit cards are an alternative for people who wish to build or update their credit records. They need a monetary deposit as collateral, which defines the credit limit. As the cardholder utilizes the card responsibly and makes timely settlements, their credit score can improve gradually. Secured credit cards are especially beneficial for people with less or poor credit history.
  • Home Equity Loans: Home equity loans authorize homeowners to borrow funds against the stocks in their real estate property. The loan sum is specified by the house's appraised worth, less any outstanding mortgage balance. These loans generally carry fixed interest rates and can be utilized for different purposes, such as education expenditures or debt consolidation.
Meet some lawyers on our platform

Emmanuel K.

1 project on CC
View Profile

Sara S.

40 projects on CC
View Profile

Ryenne S.

434 projects on CC
View Profile

Nicholas M.

7 projects on CC
View Profile

Key Terms for Secured Loans

  • Collateral: The assets or property a borrower pledges to secure a loan. The lender retains the right to sell these assets in a payment default.
  • Lender: The lender can be a monetary establishment or someone who offers the loan to the borrower.
  • Borrower: A borrower is a person or company that obtains the loan and assumes the obligation of settling it based on the agreed provisions.
  • Interest Rate: The interest rate describes the portion charged by the lender on the loan payment, reflecting the expense of borrowing.
  • Principal: The principal refers to the sum taken as a loan by the borrower without interest.
  • Loan Term: The loan term is when the borrower must settle the loan, generally defined as months or years.
  • Valuation: The process of specifying the value of the assets used to secure the loan.
  • Lien: A lawful claim against the collateral by the financial institution to secure loan repayment.
  • Default: Default happens when the borrower fails to fulfill the agreed-upon provisions of the loan, such as non-payment or infringement of the loan contract.
  • Foreclosure: Foreclosure is the legal process through which the lender acquires possession of the collateral used to secure the loan when the borrower makes payment defaults.
  • Credit Score: A credit score is a numerical expression of a person's creditworthiness. It affects their capability to obtain a loan and determines the interest rate offered to them.

Final Thoughts on Secured Loans

Secured loans provide individuals and organizations with a worthwhile financing option, offering numerous advantages such as lower interest rates, higher loan payments, longer repayment terms, and seamless approval processes. Moreover, by leveraging collateral as security, borrowers can access the funds they need while providing lenders with the necessary assurance. However, exercising caution and thoughtfully evaluating the provisions before entering a secured loan agreement is essential.

If you want free pricing proposals from vetted lawyers that are 60% less than typical law firms, click here to get started. By comparing multiple proposals for free, you can save the time and stress of finding a quality lawyer for your business needs.

How ContractsCounsel Works
Hiring a lawyer on ContractsCounsel is easy, transparent and affordable.
1. Post a Free Project
Complete our 4-step process to provide info on what you need done.
2. Get Bids to Review
Receive flat-fee bids from lawyers in our marketplace to compare.
3. Start Your Project
Securely pay to start working with the lawyer you select.

Meet some of our Secured Loan Lawyers

Octavia P. on ContractsCounsel
View Octavia
5.0 (2)
Member Since:
January 30, 2021

Octavia P.

Free Consultation
Chicago, IL
16 Yrs Experience
Licensed in IL
The John Marshall Law School

I am a business law attorney with over 10 years’ experience and a strong background in information technology. I am a graduate of the University of California Berkeley, a member of the Illinois bar and a licensed lawyer (Solicitor) of England and Wales. I actively partner directly with my clients or indirectly, as Of Counsel, to boutique law firms to streamline business practices and manage legal risks by focusing on essentials such as - business contracts, corporate structure, employment/independent contractor agreements, website terms and policies, IP, technology, and commercial related agreements as well as business risk and compliance guidance.

Elizabeth C. on ContractsCounsel
View Elizabeth
Member Since:
November 23, 2020

Elizabeth C.

Contracts Specialist
Free Consultation
Sarasota, FL
14 Yrs Experience
Licensed in NJ, NY
Quinnipiac University School of Law

As an experienced contracts professional, I offer an affordable method to have your contracts reviewed! With my review of your contract, you can understand and reduce risks, negotiate better terms, and be your own advocate. I am an Attorney, Board Member, and Freelance Writer with a Bachelor of Arts degree, magna cum laude, in Film, Television and Theatre (“FTT”) from The University of Notre Dame. I was awarded The Catherine Hicks Award for outstanding work in FTT as voted on by the faculty. I graduated, cum laude, from Quinnipiac University School of Law, where I earned several awards for academics and for my work in the Mock Trial and Moot Court Honor Societies. Additionally, in my career, I have had much success as an in-house Corporate Attorney with a broad range of generalist experience and experience in handling a wide variety of legal matters of moderate to high exposure and complexity. My main focus in my legal career has been contract drafting, review, and negotiation. I also have a background in real estate, hospitality, sales, and sports and entertainment, among other things.

Elizabeth R. on ContractsCounsel
View Elizabeth
Member Since:
January 20, 2021

Elizabeth R.

Free Consultation
Columbus, Ohio
12 Yrs Experience
Licensed in FL, OH
Florida International University School of Law

Elizabeth is an experienced attorney with a demonstrated history of handling transactional legal matters for a wide range of small businesses and entrepreneurs, with a distinct understanding of dental and medical practices. Elizabeth also earned a BBA in Accounting, giving her unique perspective about the financial considerations her clients encounter regularly while navigating the legal and business environments. Elizabeth is highly responsive, personable and has great attention to detail. She is also fluent in Spanish.

Abby V. on ContractsCounsel
View Abby
Member Since:
December 8, 2020

Abby V.

Free Consultation
Washington, DC
16 Yrs Experience
Licensed in DC, NJ, NY
Loyola University Chicago School of Law

Abby is an attorney and public policy specialist who has fused together her experience as an advocate, education in economics and public health, and passion for working with animals to create healthier communities for people and animals alike. At Opening Doors PLLC, she helps housing providers ensure the integrity of animal accommodation requests, comply with fair housing requirements, and implement safer pet policies. Abby also assists residents with their pet-related housing problems and works with community stakeholders to increase housing stability in underserved communities. She is a nationally-recognized expert in animal accommodation laws and her work has been featured in The Washington Post, USA Today, Bloomberg, and Cosmopolitan magazine.

Matan S. on ContractsCounsel
View Matan
Member Since:
January 4, 2021

Matan S.

Free Consultation
Philadelphia, PA
10 Yrs Experience
Licensed in NJ, PA

Matan is an experienced M&A, corporate, tax and real estate attorney advising closely held businesses, technology start ups, service businesses, and manufacturers in purchases, sales, and other exit strategies. Matan works with founders and first-and-second generation owners to strategically transition businesses.

Sean D. on ContractsCounsel
View Sean
Member Since:
January 26, 2021

Sean D.

Business Attorney
Free Consultation
Elkridge, Maryland
25 Yrs Experience
Licensed in MD
University of Maryland Francis King Carey School of Law

Accomplished and results-driven business attorney with extensive experience in commercial real estate / project finance, commercial transactions, and entity formations, that possesses a winning blend of subject matter expertise, skill in client relationship management, and practical experience. Leverages a unique mix of legal, strategic, and analytical expertise that consistently meets and surpasses client expectations. Specialties: Commercial Real Estate Law, Contract Negotiation, Entity Formation, Joint Ventures, Procurement, Lease/Buy/Sell Transactions, Business Consultations, Team Leadership, and Economic Development

Jonathan D. on ContractsCounsel
View Jonathan
Member Since:
February 8, 2021

Jonathan D.

Free Consultation
5 Yrs Experience
Licensed in FL
Florida International University School of Law

Miami-based duly licensed attorney and customs broker with significant experience in various types of supply chain business agreements, as well as experience in entertainment law.

Find the best lawyer for your project

Browse Lawyers Now
Secured Loan lawyers by city
See All Secured Loan Lawyers
related contracts
See More Contracts
other helpful articles

How It Works

Post Your Project

Get Free Bids to Compare

Hire Your Lawyer


Want to speak to someone?

Get in touch below and we will schedule a time to connect!

Request a call

Find lawyers and attorneys by city