Secured loan - Revision history

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	<onlyinclude>A '''secured loan''' is a loan backed by [[collateral]] posted by the debtor usually in the form of [[liquid asset]]s. If the debtor fails to repay the loan within the terms of the contract, the lending institution has the legal right to seize the assets.</onlyinclude><ref name=Book1>R. A. Brealey et al. ''Fundamentals of Corporate Finance''. Toronto: McGraw-Hill Ryerson, 2012, pp. 656.</ref> Posting collateral allows the debtor to borrow at a lower interest rate as the loan is less risky that it would be it were [[unsecured loan \| unsecured]], meaning without posted collateral.<ref>J.Black, N. Hashimzade, and G. Myles. (2009) "Secured Loan." [Online], Available: http://www.oxfordreference.com/view/10.1093/acref/9780199237043.001.0001/acref-9780199237043-e-2790?rskey=ht6uyj&result=1, 2009 [Aug 20, 2016]</ref>		<onlyinclude>A '''secured loan''' is a loan backed by [[collateral]] posted by the debtor usually in the form of [[liquid asset]]s. If the debtor fails to repay the loan within the terms of the contract, the lending institution has the legal right to seize the assets.</onlyinclude><ref name=Book1>R. A. Brealey et al. ''Fundamentals of Corporate Finance''. Toronto: McGraw-Hill Ryerson, 2012, pp. 656.</ref> Posting collateral allows the debtor to borrow at a lower interest rate as the loan is less risky that it would be it were [[unsecured loan \| unsecured]], meaning without posted collateral.<ref>J.Black, N. Hashimzade, and G. Myles. (2009) "Secured Loan." [Online], Available: http://www.oxfordreference.com/view/10.1093/acref/9780199237043.001.0001/acref-9780199237043-e-2790?rskey=ht6uyj&result=1, 2009 [Aug 20, 2016]</ref>

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	*Home equity line of credit		*Home equity line of credit

	==~~See Also~~==		==For Further Reading==
	*[[Loan]]		*[[Loan]]
	*[[Unsecured loan]]		*[[Unsecured loan]]
			*[[Asset]]
			*Or explore a [[Special:Random\|random page]]

	==References==		==References==
	{{reflist}}		{{reflist}}
			[[Category: Uploaded]]

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	<onlyinclude>A '''secured loan''' is a loan backed by [[collateral]] posted by the debtor usually in the form of [[liquid asset]]s. If the debtor fails to repay the loan within the terms of the contract, the lending institution has the legal right to seize the assets.</onlyinclude><ref name=Book1>R. A. Brealey et al. ''Fundamentals of Corporate Finance''. Toronto: McGraw-Hill Ryerson, 2012, pp. 656.</ref> Posting collateral allows the debtor to borrow at a lower interest rate as the loan is less risky that it would be it were [[unsecured loan \| unsecured]], meaning without posted collateral.<ref>J.Black, N. Hashimzade, and G. Myles. (2009) "Secured Loan." [Online], Available: http://www.oxfordreference.com/view/10.1093/acref/9780199237043.001.0001/acref-9780199237043-e-2790?rskey=ht6uyj&result=1, 2009 [Aug 20, 2016]</ref>		<onlyinclude>A '''secured loan''' is a loan backed by [[collateral]] posted by the debtor usually in the form of [[liquid asset]]s. If the debtor fails to repay the loan within the terms of the contract, the lending institution has the legal right to seize the assets.</onlyinclude><ref name=Book1>R. A. Brealey et al. ''Fundamentals of Corporate Finance''. Toronto: McGraw-Hill Ryerson, 2012, pp. 656.</ref> Posting collateral allows the debtor to borrow at a lower interest rate as the loan is less risky that it would be it were [[unsecured loan \| unsecured]], meaning without posted collateral.<ref>J.Black, N. Hashimzade, and G. Myles. (2009) "Secured Loan." [Online], Available: http://www.oxfordreference.com/view/10.1093/acref/9780199237043.001.0001/acref-9780199237043-e-2790?rskey=ht6uyj&result=1, 2009 [Aug 20, 2016]</ref>

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	If a firm takes out a loan of $1 million and posits its '''accounts receivable''' (money that other firms owe to the debtor) it would receive a loan of $750,000.00. If the firm posted its inventory it might only receive 60% of the requested amount, $600,000.00. This reduction in the amount is known as a '''haircut''' and is used to ensure repayment will occur and that the lender can recover its money if the firm fails to meet the terms of the loan.		If a firm takes out a loan of $1 million and posits its '''accounts receivable''' (money that other firms owe to the debtor) it would receive a loan of $750,000.00. If the firm posted its inventory it might only receive 60% of the requested amount, $600,000.00. This reduction in the amount is known as a '''haircut''' and is used to ensure repayment will occur and that the lender can recover its money if the firm fails to meet the terms of the loan.

	==Common Types of Secured Loans<ref>~~Investopedia.~~ "~~Secured Debt.~~" ~~[Online]~~, ~~Available: http://www~~.~~investopedia.com/terms/s/secureddebt.asp?ad=dirN&qo=investopediaSiteSearch&qsrc=0&o=40186~~ [~~Aug 21~~, ~~2016~~].</ref>==		==Common Types of Secured Loans==
			Here are some common secured loans.<ref name=Ox_econ>"A Dictionary of Economics" published Oxford University Press, 2013. Edited by John Black, Nigar Hashimzade, and Gareth Myles Online version accessed [August 17th, 2017].</ref>
	*Mortgage		*Mortgage
	*Car loan		*Car loan

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Jmdonev at 19:43, 26 August 2016

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[[Category:Done 2016-04-30]]
<onlyinclude>A '''secured loan''' is a loan backed by [[collateral]] posted by the debtor usually in the form of [[liquid asset]]s. If the debtor fails to repay the loan within the terms of the contract, the lending institution has the legal right to seize the assets.</onlyinclude><ref name=Book1>R. A. Brealey et al. ''Fundamentals of Corporate Finance''. Toronto: McGraw-Hill Ryerson, 2012, pp. 656.</ref> Posting collateral allows the debtor to borrow at a lower interest rate as the loan is less risky that it would be it were [[unsecured loan | unsecured]], meaning without posted collateral.<ref>J.Black, N. Hashimzade, and G. Myles. (2009) "Secured Loan." [Online], Available: http://www.oxfordreference.com/view/10.1093/acref/9780199237043.001.0001/acref-9780199237043-e-2790?rskey=ht6uyj&result=1, 2009 [Aug 20, 2016]</ref>

As an additional security measure, a lending institution will usually only loan up to 75% of the value of the posted collateral depending on what type of asset is posted.<ref>J. Berk et al. ''Corporate Finance''. Toronto: Pearson Canada Inc., 2012, pp. 932.</ref>

If a firm takes out a loan of $1 million and posits its '''accounts receivable''' (money that other firms owe to the debtor) it would receive a loan of $750,000.00. If the firm posted its inventory it might only receive 60% of the requested amount, $600,000.00. This reduction in the amount is known as a '''haircut''' and is used to ensure repayment will occur and that the lender can recover its money if the firm fails to meet the terms of the loan.

==Common Types of Secured Loans<ref>Investopedia. "Secured Debt." [Online], Available: http://www.investopedia.com/terms/s/secureddebt.asp?ad=dirN&qo=investopediaSiteSearch&qsrc=0&o=40186 [Aug 21, 2016].</ref>==
*Mortgage
*Car loan
*Home equity line of credit

==See Also==
*[[Loan]]
*[[Unsecured loan]]

==References==
{{reflist}}