Homer wants to borrow money from the Springfield Bank to buy a new trampoline. The bank requires collateral for a loan. What is collateral?
Answers
Answer:
Collateral is an asset that a lender accepts as security for extending a loan. If the borrower defaults on her loan payments, the lender may seize the collateral and sell it to recoup some or all of his losses. Collateral can take the form of real estate or other kinds of assets, depending on what the loan is used for.
The types of collateral that lenders commonly accept include cars (if they are paid off in full), bank savings deposits, and investment accounts. Retirement accounts are not usually accepted as collateral.
I hope it helps.
Explanation:
Answer:Collateral is an asset that the borrower owns (such as land,building,vehicle,livestock, deposits with banks)and uses this as a guarantee to a lender until the loan is repaid
Explanation: