define collateral in eco
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Step-by-step explanation:
Collateral is an asset or form of physical wealth that the borrower owns like house, livestock, vehicle etc. It is against these assets that the banks provide loans to the borrower. The borrower uses assets as a guarantee to a lender until the loan is repaid.
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Answer:
something pledged as security for repayment of a loan, to be forfeited in the event of a default.
explanation:
The term collateral refers to an asset that a lender accepts as security for a loan. ... That is, if the borrower defaults on their loan payments, the lender can seize the collateral and sell it to recoup some or all of its losses.
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