Why are secured loans considered less risky to the lender?
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Why are secured loans considered less risky to the lender?
Secured loans are considered less risky to the lender because they are backed by collateral. This means that if the borrower fails to repay the loan, the lender has the right to seize the collateral (such as a house or car) to recover the amount owed. This reduces the lender’s financial risk, as they have a tangible asset to fall back on in the event of default.