Secured Notes

A secured note is a note that is backed with some sort of collateral which helps assure that the lender will see return of the loan amount. The …

A secured note is a note that is backed with some sort of collateral which helps assure that the lender will see return of the loan amount. The can also be referred to as a collateralized note or collateralized loan. What makes the note "secure" is that the lender has an underlying asset to secure the obligation of the borrower.

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A Mortgage is a good example of secured note. Real estate is the most common asset used to secure notes. Other assets, however, are not prohibited from being used as security for a borrower obligation. Most car loans involve a secured note, which is why lenders will "repossess" the car if the borrow fails to pay. In this way repossession is similar to foreclosure for the purposes of securing a note.

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