EverFi Financial Literacy High School Practice Test 2026 – All-in-One Guide to Master Financial Literacy!

Question: 1 / 400

What is the key feature of a secured loan?

It is based on credit score

It requires no collateral

It requires collateral

A secured loan is characterized by the requirement for collateral, which is an asset that a borrower offers to a lender to secure the loan. This collateral acts as a guarantee that the lender can recover some or all of the loan amount if the borrower fails to repay. Common examples of collateral include property, vehicles, or savings accounts. By requiring collateral, lenders reduce their risk, often which allows them to offer lower interest rates compared to unsecured loans, but the defining feature remains the necessity of that collateral. This principle is essential for borrowers to understand since it directly affects their ability to secure financing and the potential repercussions of defaulting on the loan.

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It has a lower interest rate

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