A secured loan is a loan that has collateral attached to it. The collateral stands good for the loan and if you miss payments or default on the loan, then the bank can collect the collateral. This type of loan generally has a lower interest rate because the bank is taking a lower risk because it can collect the collateral if you default on payments. A secured loan can be a good way to build credit if you go through a reputable lender like a bank or credit union.