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Whenever a loan is supported by an asset (the asset is generally a real estate), it is called a secured loan. The loan is also referred to as low risk loan because of the support provided by the asset. Because of the supportive asset, the risk is at its minimum for the lenders. This is because of the fact that in case the borrower fails to repay, the lender will take possession of the property in lieu of the money.

In legal words, secured loan is defined as a loan variant where the borrower pledges his or her real estate as a collateral against the money borrowed from a money lender and in case the borrower fails to repay, he or she will forfeit the property. In this form of the loan, the collateral works as the balancing factor against the risk taken by the lender. The loan amount sanctioned by the lender actually depends on some very crucial factors which are mentioned below:

- The amount of loan will depend on moneylender offering loan.

- The borrower's credit history is also a determining factor for the loan amount.

- The borrower's financial background will be a major parameter for determining the loan amount.

- The total value of the asset will determine the amount of the loan.

From the point of view of the debtor, the secured loan is extremely risky because if, the debtor defaults, the property will be confiscated by the lender.

A secured loan can be beneficial for many and the loan will generally be tailored as per the borrower's requirements. However, there are people for whom the loans are just not suitable. Secured loans are in general long term loans and the loan amount is generally amortized for a period of 25 years or even more. People can use these loans according to their wish and the lender will not intervene in that. This happens because of the collateral. The lenders know that the borrowers will use the money responsibly because just in case they fail to repay, they will forfeit the collateral. The borrowers are also aware of this fact and hence, they ensure that they make use of the money responsibly and never default. No one wants to lose their property!

People who need large amount of money go for a secured loan. This is good for them because they can make use of the large repayment period to comfortably pay back the loan money to the lenders. Application approval procedure for a secured loan is pretty stringent and the applications are evaluated on the basis of a number of parameters. However, there are many lenders who offer this type of loan. All you have to do is to make sure that you compare the offers of different lenders to get the best deal. It is not really easy to compare all of them and hence, many people prefer to use the services of financial advisors to get a lock on the right secured loan offer. While choosing a secured loan, it is very essential to make sure that you get the right one because incorrect choice will actually lead to loss.