Final answer:
A loan in which the lender can seize specified assets of the borrower if they default is known as a secured loan, with the borrower providing collateral such as property or equipment.
Step-by-step explanation:
If the lender has the right to take certain specified assets of the borrower in the event of a default on the loan, the loan is referred to as a secured loan.
In a secured loan, the borrower provides collateral, which is something valuable—often property or equipment—that a lender can seize and sell if the loan is not repaid.
This is different from an unsecured loan, where the lender lends money based solely on the borrower's creditworthiness and there is no collateral pledged as security for the loan.
For example, a mortgage is a common type of secured loan where the property being purchased acts as collateral.
If the borrower fails to make the required payments, the lender has the right to foreclose on the property to recoup their losses.
It's important for both lenders and borrowers to be aware of the terms of the loan agreement, including the rights that pertain to collateral.