The most common types of collateral are real estate or automobiles, though it can be anything that is equal or greater value than the amount that you borrow. In most cases, you don`t give up physical possession of your car or home - you can go on driving it or living in it as long as you continue making your payments on the loan. Instead, you sign a note that gives the lender a legal right to the title or the deed to your car or home. If you default on the loan - don`t make the payments that you`ve agree to make - then the lending agency can take possession of your property. If it`s an automobile, it`s commonly called repossession. For real estate, it`s called a foreclosure. In either case, the lending agency has the right to sell your property in order to recover their loan.

While autos and real estate are the most common types of collateral, some lenders will lend money with jewelry, coins or other collectibles or other types of vehicles. Most often, if you secure a loan with an item like jewelry or collectibles, the lending agency will take possession of the item until the loan is repaid.

How to find a secured loan if you have bad credit

Many lenders - banks in particular - don`t deal in any sort of secured loan other than second mortgages. Other institutions deal almost exclusively in secured loans. Finance companies that deal in secured loans can be found in your phone book, newspaper, and increasingly, online. Shop around and compare interest rates on loans and the terms of repayment with several different lenders. You`ll find many internet sites that let you request a loan rate quote from multiple lenders at once.

Once you`ve submitted a request for a loan quote, you`ll be contacted by representatives from several companies and can get a good idea of what each can offer you in terms of interest and other finance charges and fees. Choose the best one for your needs, and apply for the loan. It`s that easy.