Which of the Following is Most Like a Short-Term Collateralized Loan?
Contents
A loan that is secured by collateral and has a term of one year or less is most like a short-term collateralized loan.
Checkout this video:
Introduction
A collateralized loan is a loan that is backed by collateral. The collateral can be in the form of property, such as a home or a car, or it can be in the form of a savings account or other asset. If the borrower defaults on the loan, the lender can seize the collateral to recoup their losses.
Collateralized loans are often used by borrowers with bad credit, as they provide the lender with some security in case of default. These loans can be either short-term or long-term, depending on the needs of the borrower.
What is a short-term collateralized loan?
A short-term collateralized loan is a loan where the borrower pledges some asset (e.g. a car or piece of jewelry) as collateral for the loan. The asset is usually sold if the borrower fails to repay the loan.
What are the most common types of short-term collateralized loans?
The most common types of short-term collateralized loans are:
-loans against savings accounts
-loans against checking accounts
-loans against certificates of deposit
-loans against stocks and bonds
Which of the following is most like a short-term collateralized loan?
A collateralized loan is a loan that is backed by collateral. Collateral is an asset that the borrower pledges to the lender in order to secure the loan. If the borrower defaults on the loan, the lender can seize the collateral and sell it to recoup the losses.
The following are all examples of collateralized loans:
-Home mortgages
-Auto loans
-Personal loans
-Business loans
Conclusion
After reviewing the options, we believe that the most similar type of loan to a short-term collateralized loan is a payday loan. Payday loans are typically for small amounts of money and are due in full on your next payday. Like a short-term collateralized loan, they are meant to be used for unexpected expenses or emergencies. Unlike a short-term collateralized loan, however, payday loans typically have much higher interest rates and fees.
