A loan where the creditor has a claim on some particular part of the debtor’s assets in the event of default. This is contrasted with an unsecured loan, where the lender has no right to take over any particular asset if payments are not made when due. In the event of the borrower going bankrupt or becoming insolvent, after the tax authorities secured creditors rank before unsecured creditors for any available assets. Secured loans, such as mortgages, are thus safer than unsecured loans, and command lower rates of interest.
Reference: Oxford Press Dictonary of Economics, 5th edt.