Collateral Security vs. Additional Security
Most secured loans
either use additional security or collateral security. Collateral security refers to loans where the
security is the item that is being purchased.
With a car loan, the car is the security. When buying equipment for a business, the equipment is the collateral.
Additional security is used to secure additional funding or lower interest rates. Businesses may use this option when
applying for business loans to fund expansion or their starting costs. The additional security typically comes from real
estate properties, such as a building or land.
Within these categories, there are many types of secured loans including mortgages, car loans, boat loans, and secured