Collateralized lending is a type of loan where the borrower provides an asset, known as collateral, to secure the loan. This means that if the borrower fails to repay the loan, the lender has the right to take the collateral to recover their losses. Common forms of collateral include real estate, vehicles, or financial securities. This lending method reduces the risk for lenders, as they have a tangible asset to fall back on. It often allows borrowers to access larger loan amounts or lower interest rates compared to unsecured loans, where no collateral is required.