Lenders often are entitled to take possession of the borrower’s assets to satisfy the debt. A lien is automatically entered in the Secretary of state and is removed from it once the loan amount is paid.
A creditor lends loans based on the above criterion which means that they are to be sure of what they have to do in case of failure of payments. This gives them the confidence that even though the borrower does not pay on time, they have some of their valuable assets to claim from.
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