A secured loan or line of credit uses something that you own as collateral-typically, your house, car, or savings balances. Mortgages, Home Equity Lines of Credit and Auto Loans are common examples of secured credit products.
Additional points to consider:
- With a secured loan or line of credit, the lender can take possession of your collateral if you don't repay the loan as you have agreed.
- Because of the presence of collateral, secured loans generally have lower interest rates and higher borrowing limits, making them attractive if you need to borrow a larger amount.
- In many cases, when you use your home as the collateral, the interest you pay may be tax deductible - check with your tax advisor.