3 types of secured loans and how they


LOS ANGELES, June 10, 2022 (GLOBE NEWSWIRE) — Secured loans require borrowers to post something of value called collateral. The lender can take possession and sell the collateral to recoup losses if the borrower cannot repay their loan. There are several types of secured loans, each designed for a distinct purpose. Therefore, different types of secured loans may suit certain borrowers better. This article will delve into three common types of secured loans and what they can be used for.

Securities lending

Title loans allow car owners to use their titles as collateral to obtain funds. When obtaining a title loan, the lender will first appraise the borrower’s vehicle. Then they will offer the borrower a loan worth 25% to 50% of the value of the car. If the borrower accepts the terms of the loan, he can leave the same day with the loan. Plus, they can continue to drive their vehicle while paying off the loan.


Houses are among the most expensive things people can buy. Mortgages help buyers pay for them by using their home as collateral. These loans come with a fixed or revisable interest rate. For example, a 30-year fixed rate loan is one of the most common types of mortgages.

With mortgages, borrowers do not receive the funds right away. They must first prequalify for a mortgage, then put down a down payment on their home and go through the closing process. Only then does the lender send the funds to the home seller. Mortgage borrowers can then start repaying their loans every month.


Pawnbrokers allow borrowers to use almost any valuables they own as collateral for a loan from a pawnbroker. These don’t require any credit checks, and pawnshops don’t often check the borrower’s income either. The pawnbroker will first appraise the borrower’s item and then offer the borrower a loan amount and a set of terms. The borrower can leave with his loan the same day. Borrowers generally must repay their loans plus interest within 30 days or the pawnbroker will keep the collateral.

How to choose the right secured loan

Each loan serves a different purpose. Title loans can work well for borrowers who own a vehicle because these loans offer same-day financing and the borrower can continue to drive their vehicle while paying off the loan.

Mortgages are a great option for home buyers. In fact, it’s the only type of loan large enough to buy a home. And any other borrower who needs a quick loan without a specific type of collateral could consider a pawnbroker. These don’t require a credit or income check, and borrowers can use almost anything of value. Ultimately, borrowers should consider the purpose of their loan and what they can use as collateral to choose the right option for their unique situation.

Notice: The information provided in this article is provided for guidance only. Consult your financial advisor about your financial situation.

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