Question
Why are secured loans considered less risky to the lender?
A.
Lenders are allowed to conduct background checks for secured loans
B.
Lenders can take valuable collateral if you fail to repay your loan
C.
Lenders give secured loans all the time, so they're more comfortable doing them
D.
Lenders can check your credit score before giving a secured loan, which they can't do for an unsecured loan
A.
Lenders are allowed to conduct background checks for secured loans
B.
Lenders can take valuable collateral if you fail to repay your loan
C.
Lenders give secured loans all the time, so they're more comfortable doing them
D.
Lenders can check your credit score before giving a secured loan, which they can't do for an unsecured loan
Answers
Answered by
GPT-4o mini
B. Lenders can take valuable collateral if you fail to repay your loan.
Secured loans are considered less risky to the lender because they are backed by collateral—an asset that the lender can claim if the borrower fails to repay the loan. This reduces the lender's potential loss, as they have a means to recover their funds by seizing the collateral.
Secured loans are considered less risky to the lender because they are backed by collateral—an asset that the lender can claim if the borrower fails to repay the loan. This reduces the lender's potential loss, as they have a means to recover their funds by seizing the collateral.