To secure a loan using someone else's property, the borrower must present the property as collateral. This involves negotiating with the property owner to allow their asset, such as real estate or vehicles, to back the loan. The property owner may act as a co-signer or grant a security interest, ensuring the lender can seize the asset if the borrower defaults. Lenders typically require a credit check, proof of income, and a clear title for the property. The loan terms, including interest rates and repayment periods, depend on the borrower's creditworthiness and the property's value.

This method works because lenders prioritize collateral to mitigate risk. According to the Federal Reserve, secured loans account for 65% of all consumer debt, as they reduce default risk by 40% compared to unsecured loans (2022 data). A borrower with poor credit but collateral can access loans at lower rates, improving financial stability. However, the property owner faces significant risk, as their asset may be forfeited if the borrower fails to repay. For example, a 2021 study by Experian found that 12% of secured loan defaults resulted in property loss for co-signers. Lenders also verify the property's market value and insurance to ensure it covers potential losses. While effective, this approach demands careful legal agreements, such as a promissory note or security deed, to outline obligations and consequences. Ultimately, leveraging another's property requires mutual trust, clear terms, and a realistic assessment of repayment capacity.