Editing Equity (finance) (section)

==Single assets==
Any asset that is purchased through a [[secured loan]] is said to have equity. While the loan remains unpaid, the buyer does not fully own the asset. The lender has the right to repossess it if the buyer [[Default (finance)|defaults]], but only to recover the unpaid loan balance. The equity balance—the asset's market value reduced by the loan balance—measures the buyer's partial ownership. This may be different from the total amount that the buyer has paid on the loan, which includes interest expense and does not consider any change in the asset's value. When an asset has a deficit instead of equity, the terms of the loan determine whether the lender can recover it from the borrower. Houses are normally financed with non-recourse loans, in which the lender assumes a risk that the owner will default with a deficit, while other assets are financed with full-recourse loans that make the borrower responsible for any deficit.

The equity of an asset can be used to secure additional liabilities. Common examples include [[home equity loan]]s and [[home equity line of credit|home equity lines of credit]]. These increase the total liabilities attached to the asset and decrease the owner's equity.