Because the charge against the borrower’s asset gives the lender the opportunity to take possession of the asset (possibly via court proceedings) and sell it. The lender is then allowed to deduct from the sale proceeds any remaining unpaid loan principal, plus any interest owing, plus the lender’s costs for the debt recovery process. If any funds remain after all these amounts have been deducted, the balance is returned to the borrower. In addition, the charge over your asset gives the lender some assurance that you will do whatever it takes to repay your loan rather than risk losing your asset.