What is a secured loan?

Explanation

A secured loan is a type of short-term financing in which a borrower is required to pledge some assets as collateral for the loan. The different types of current assets that are pledged as security for short-term loans are marketable securities, equipment, account receivable, and inventory.
Pledging a collateral is important as it serves as a lender's protection against a borrower default.

Verified Answer

A secured loan is a type of financing in which the lender will extend the loan to the buyer only when the borrower pledges any collateral against the loan.