An example of secured credit is a A. payday loan. B. credit card.

An example of secured credit is a

A. payday loan.

B. credit card.

C. mortgage.

D. medical bill.

Answer – C. mortgage.

The loans and different types of financing options that are offered to the consumers can be divided into two different categories that include secured debts and the unsecured debts. Major difference between these two types of debts is related to the presence or the absence of any type of collaterals that can provide appropriate protection to the lender when the borrowers default their loans. The secured debts are considered to be those types of debts based on which the borrowers can put up some assets that can serve as effective collaterals for loans being provided to them. Secured loans can lower amounts of the risks that are being faced by the lenders so that they can be provided with appropriate loans. The lenders issue funds within unsecured loans based on the credit worthy nature of the borrowers. On the other hand, secured debts can pose lower risks to lenders and in this case interest rates are considered to be quite low. The lenders in this case have the right to seize the mortgaged properties in the case of default by the borrowers. Mortgages are thereby considered as a major process of secured credit that can be gained by the borrowers for providing loans to the lenders. When the individuals or the businesses take out the mortgages, the properties that are being placed by them are also used as the means of repayment and the lenders also have an equity within these properties. In case of a default by the borrower on payments the capturing of these properties plays an important role in ensuring the payment of loans that have been taken by them. Lenders can thereby sell these properties for recovering their money during defaults.