An Indiana secured promissory note establishes a loan repayment agreement wherein the money borrower is obligated to put up collateral as a financing condition. By offering an asset as collateral, the borrower guarantees some form of compensation for the money lent, therefore reducing the lender’s risk. This lending arrangement is often required for borrowers with poor credit, preexisting debt, or fluctuating income, as these individuals may have difficulty obtaining approval for an unsecured loan.

The collateral will serve as a backup in the event that payment is not made. Should the borrower fail to uphold their loan commitments, the lender may sell the collateral to cover the financial deficit.