A secured transaction a loan or other credit transaction in which the lender is granted a security interest in collateral owned by the borrower. The lender is entitled to foreclose on or repossess the collateral in the event of the borrower's default.
The secured transaction is governed by a contract, the security agreement . When the security interest is perfected the creditor becomes a secured creditor.
The security interest is either personal property or real property. A frequent secured transaction involving personal property is a purchase of a car on credit. In the U.S., secured transactions in personal property are governed by article 9 of the Uniform Commercial Code .
The law treats differently secured creditors from unsecured creditor . The secured creditor will generally always have priority to getting his money before the unsecured creditors do.