What would often be a consequence of failing to repay a secured loan?

When a secured loan is taken out, it is backed by collateral, which is an asset that the borrower provides to guarantee repayment. If the borrower fails to repay the secured loan as agreed, one of the primary consequences is the loss of that collateral. This means that the lender has the right to seize the asset used to secure the loan, such as a car or property, in order to recover their losses. This is a key characteristic of secured loans—unlike unsecured loans, where no collateral is required, secured loans fundamentally involve the risk of losing the pledged asset if the borrower defaults on payments. Understanding this concept is crucial in recognizing the implications of borrowing against collateral, as it emphasizes the importance of being able to meet repayment obligations.