What distinguishes a secured loan from an unsecured loan?

A secured loan is distinguished by the fact that it is backed by collateral. This means that the borrower provides an asset, such as a home or a car, which the lender can claim if the borrower fails to repay the loan. The presence of collateral reduces the lender’s risk, allowing them to offer more favorable terms, such as lower interest rates, compared to unsecured loans, which do not have collateral backing them.

The other options, while they may apply to some loans in certain situations, do not fundamentally define what a secured loan is. For instance, a secured loan may be cheaper to repay, but it's not always the case; it depends on various factors like the interest rates and overall loan terms. Similarly, while some secured loans may require a co-signer especially if the borrower has poor credit, this is not a defining feature of secured loans in general. Lastly, secured loans can have fixed interest rates, but they can also have variable rates; thus, the interest rate type is not a characteristic that distinguishes them from unsecured loans.