Which statement is true of both mortgages and auto loans?

Both mortgages and auto loans are types of secured loans, meaning they are backed by collateral. In the case of a mortgage, the collateral is the property being purchased, while for an auto loan, the collateral is the vehicle. This security allows lenders to offer lower interest rates compared to unsecured loans since they can reclaim the collateral if the borrower defaults. Additionally, both types of loans involve a structured repayment plan consisting of principal and interest payments over a specified term. Furthermore, both can impact the borrower's credit score, positively with on-time payments or negatively with missed payments. Overall, the fundamental principle that both loans are secured and typically involve regular repayments is a key characteristic they share.