Question

What is the purpose of secured transactions?

Answer 1

Secured transaction is a loan or a credit transaction in which the lender acquires a security interest in collateral owned by the borrower and is entitled to foreclose on or repossess the collateral in the event of the borrower's default.

The purpose of secured transactions is:

A security interest promotes economic security because it provides the lender with the promise of repayment: if the borrower defaults on the loan, the lender should be able to recoup the loan amount by taking the agreed-upon asset used as collateral and selling it. A security interest can be particularly valuable in bankruptcy, because secured creditors will be able to collect their debts before creditors without a security interest.

answered by: anonymous