secured loans are less costly than unsecured loans because _________.
LectureNotes said secured loans are less costly than unsecured loans because __________.
Answer:
Secured loans are less costly than unsecured loans because they are backed by collateral. Collateral provides security to the lender in case the borrower defaults on the loan. Since there is less risk for the lender with secured loans, they offer lower interest rates compared to unsecured loans. This lower interest rate is a cost-saving advantage for borrowers. Additionally, the presence of collateral allows borrowers to access larger loan amounts and may also result in more flexible repayment terms. Overall, the reduced risk for the lender translates to cost savings for the borrower when opting for a secured loan.