What does it mean when a lender offers a secured loan?
Lenders don't like risk, and the best way for them to reduce risk is to secure loans on property. In some cases the loan is secured on your home, in others it's secured on your car, and in the case of hire purchase loans it's secured on the item you're financing.
Lenders like to secure loans on property, whether it's your house, your car or the actual item you're borrowing money for. The most common way in which lenders secure loans is on buildings, so for example your mortgage or a homeowner loan will use your house as security. Another common form of security is with car loans, where the lender will secure loans against the vehicle being purchase, or with hire purchase, where the security is the item you're buying.
When you're dealing with secure loans it's important to realise that you're essentially saying "I promise to give you your money back, and if I don't you can have my car." In the case of car loans and hire purchase, you don't actually own the item until the last payment has been made; until the final payment has been cleared, the item is owned by the lender. It's particularly important if you're buying a second-hand car: always check that there's no outstanding finance. If you don't and there's money still outstanding, the lender can repossess the vehicle.
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