Which of the following is an example of a secured credit product?

A secured credit product is one that is backed by collateral, meaning that the lender has a legal claim to an asset in the event that the borrower defaults. Mortgages fit this definition perfectly because they are secured by the property itself. If a borrower fails to make payments on a mortgage, the lender can repossess the property through foreclosure, thus providing a financial safeguard for the lender.

In contrast, personal loans, credit cards, and payday loans are generally considered unsecured forms of credit. This means they do not require collateral; instead, the terms of these loans are based on the borrower's creditworthiness alone. Consequently, if a borrower defaults on these types of loans, the lender may seek repayment through other means, such as legal action, but they do not have direct access to any specific asset.

Understanding the differences between secured and unsecured credit products is essential for managing personal finance effectively, as secured products often come with lower interest rates due to the reduced risk for lenders.