What might be a feature of loans secured by assets as opposed to income?

Loans secured by assets, often referred to as secured loans, prioritize the liquidation potential of the collateral backing the loan. This means lenders evaluate how easily the asset can be converted into cash in the event of default. The value and marketability of the asset determine the amount of credit extended. This approach differs from income-based loans, where the borrower's ability to generate income is the primary consideration for loan approval.

While personal credit history, employment status, and credit scores play roles in various lending scenarios, secured loans primarily hinge on the value of the asset itself. This focus on the collateral allows lenders to reduce their risk, as they have a tangible item they can seize and sell should the borrower fail to repay the loan. This distinction makes the evaluation of asset liquidation potential the central feature distinguishing secured loans from those that rely more heavily on the borrower's income.