Question

Which describes the difference between secured and unsecured credit?

Answer 1

Answer:

Step-by-step explanation:

When a lender lends credit say for purchase of a car or a house, the lender will get some security for his safety of funds.  In case of default, he resorts to selling the security and getting his credit adjusted.

Example: housing loan, car loan, etc.

When a credit is extended without any collateral security or prime security is it unsecured.  Example, credit cards, student loans, personal loans.  These are given only depending on the reputation of the borrower without any other security to be sold in case of default.

Answer 2

A secured credit is secured by something else. An example is that a home mortgage is secured by the home.