Fill in the Blank QuestionFill in the blank question.A loan backed by collateral, something valuable like property, is called a loan.

A loan backed by collateral, something valuable like property, is called a secured loan.

Secured loans are designed to minimize the lender's risk by requiring the borrower to pledge an asset as collateral. This can include real estate, vehicles, or other valuable items. If the borrower defaults on the loan payments, the lender has the right to seize the collateral to recover their losses. This arrangement typically results in lower interest rates compared to unsecured loans, where no collateral is involved, as the lender faces a higher risk. It's essential for borrowers to understand the implications of securing a loan with collateral, as they may lose their asset if they're unable to repay the loan as agreed.