Question
Why do some lenders require borrowers to secure credit?
to prevent defaults
to guarantee full repayment
to avoid any losses
to reduce risk
to prevent defaults
to guarantee full repayment
to avoid any losses
to reduce risk
Answers
GPT-4o mini
Some lenders require borrowers to secure credit primarily **to reduce risk**. By securing the loan with collateral (such as property, vehicles, or other assets), lenders have a form of protection in case the borrower defaults. If the borrower fails to make payments, the lender can take possession of the secured asset, which helps mitigate potential losses. This practice enables lenders to offer loans to borrowers with lower creditworthiness while also ensuring some level of financial safety for themselves.