Question

Explain the importance of collateral​

Answer 1

Answer:

1.Collateral refers to assets or personal property .

2.if the borrower defaults on loan secured with collateral.

3.A loan secured with collateral is a better investment .

4.if you have bad credit or limited income lenders may be more willing to approve your application of you agree to pledge collateral.

Answer 2

Answer:

Collateral is important because lenders want you to have some input in the game. They're taking a risk so they want you to risk something too. Large loans and borrowers without a solid credit history are most likely to need collateral.