You can think of a secured loan as a loan ‘with security’ – which means the asset you buy is used as a type of guarantee against the money you borrow from a lender. Secured personal loans are common when purchasing a new carbecause most of us can’t afford to buy a new ride with cash, right? . In most cases, the vehicle being purchased is put up as collateral in case you default on the loan. The same goes for when you take out a mortgage – if you decide to flee the country, the lender may be allowed to take ownership of your house and sell it to recoup the cost.