What type of debt is considered to have collateral?

Secured debt is characterized by the presence of collateral, which is an asset that a borrower agrees to forfeit in the event of default on the loan. This means that if the borrower fails to repay the secured loan, the lender has the legal right to seize the collateral to recover their losses. Common examples of secured debt include mortgages and car loans, where the house or vehicle acts as collateral, respectively.

In contrast, unsecured debt does not come with collateral. It is based solely on the borrower’s creditworthiness, where the lender relies on the borrower's promise to repay. Typical examples of unsecured debts include credit card debt and most personal loans, where there is no specific asset backing the loan. This lack of collateral generally makes unsecured debt more risky for lenders, which can lead to higher interest rates compared to secured debt.

Student loans, depending on their type and the lender, can be considered either unsecured or secured. However, they do not typically involve collateral in the traditional sense associated with secured loans. Credit card debt also falls under the category of unsecured debt, lacking any collateral. Thus, secured debt clearly stands out due to its association with collateral, affirming its position as the correct answer in this context.