What Is Secured Debt? | Financial Terms

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Secure debt is when you're borrowing money but that loan is secured by some form of collateral. So let me give you an example. If I'm borrowing for a mortgage, that's an example of secure debt. Because if I don't make my mortgage payment, the lender can come and foreclose on my property. They have collateral there. Another example of secure debt would be a car loan. I take out a car loan, but if I'm not making my car payment, the lender can come and repossess my car. Those are examples of secure debt. Uh, unsecure debt would be something like a credit card where there is no collateral there. And the thing to keep in mind when it comes to secure debt, is that the rates and the terms are usually going to be better for secured debt than they are for unsecured debt because the risk is less to the lender. In the event that you don't make your payments, the lender can actually come after that collateral or take that collateral to try and limit any loss they may incur from not being paid the regular payments um, that were part of the deal. So keep that in mind, just the difference between secured debt and unsecured debt as your looking at and reviewing your overall debt situation.