Lien
Also known as: security interest, encumbrance
A lender's legal claim against an asset (home, car) used as collateral for a loan. If you default, the lien gives the lender the right to seize and sell that asset to recover the debt. Personal loans are unsecured and carry no lien.
Full definition
A lien is a legal right or claim a creditor holds against a debtor's property as security for a debt. If the borrower fails to repay, the lienholder can force the sale of the property to satisfy the debt. Common lien types in consumer finance: Mortgage lien (your home as collateral for a home loan), auto lien (your car as collateral for an auto loan), HELOC or home equity loan lien (home equity as collateral), mechanic's lien (contractor's claim for unpaid work on property). Why personal loans have no lien: Unsecured personal loans are not backed by any asset. The lender relies solely on your creditworthiness and income, not on a claim against property. If you default on an unsecured personal loan, the lender cannot directly seize your assets without first getting a court judgment. This is what distinguishes unsecured borrowing from secured borrowing. Some secured personal loans do have liens: OneMain Financial and some credit unions offer secured personal loans where a car or savings account serves as collateral. These carry a lien on that specific asset, which the lender will note on your title (for a car) or hold in a pledged savings account. Checking for liens: You can search for liens on real property through your county recorder's office. Auto liens typically appear on the vehicle title. For personal property, liens may be filed as UCC financing statements.
- Written by
- Get Advance Loan Editorial Team
- Reviewed by
- Compliance Review
- Published
- January 15, 2026
- Last reviewed
- June 15, 2026
- APR (Annual Percentage Rate)APR is the yearly cost of borrowing, expressed as a percentage of the loan amount. It includes interest plus most lender fees, so it's a more complete measure of cost than the interest rate alone.
- Interest rateThe interest rate is the percentage of the loan balance charged per year as interest, excluding fees. It is a component of, but smaller than, the APR.
- Fixed interest rateA fixed rate stays the same for the entire life of the loan, so the monthly payment never changes. Most U.S. personal loans are fixed-rate.
- Variable interest rateA variable rate can change over the life of the loan, usually tied to an index like the prime rate. Monthly payment can rise or fall.
- Prime rateThe prime rate is the benchmark interest rate U.S. banks publish for their most creditworthy commercial customers. Many consumer rates are quoted as prime + a margin.
- Loan termThe loan term is how long you have to repay the loan, usually expressed in months. Common personal-loan terms are 24, 36, 48, 60, and 72 months.
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