Secured loan: Difference between revisions
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A [[loan]] where the borrower grants the [[lender]] a security interest over its property to mitigate the credit risk. | {{a|security|}} | ||
A [[secured loan]] is a [[loan]] where the [[borrower]] grants the [[lender]] a [[security interest]] over its property to mitigate the [[credit risk]]. | |||
A home loan is a great example. The Lender gives you money; you grant the lender a [[mortgage]] over the title to your house. | A home loan is a great example. The Lender gives you money; you grant the lender a [[mortgage]] over the title to your house. | ||
Latest revision as of 13:04, 3 December 2018
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A word about credit risk mitigation
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A secured loan is a loan where the borrower grants the lender a security interest over its property to mitigate the credit risk.
A home loan is a great example. The Lender gives you money; you grant the lender a mortgage over the title to your house.
Not all forms of collateral are security interests of course: title transfer collateral arrangements, for very good example. So something can resemble a secured loan without actually being one.
A repo resembles a secured loan, but isn’t either secured or, for that matter, a loan. Likewise, a stock loan is not a loan and nor is it secured, unless you are using the new pledge GMSLA form, in which case it is secured, but still is not a loan.