Question

List three importance of collateral. (3marks) . Give three points

Answer 1

• 1 collateral is an asset that the borrower owns and use as gurrantee to lender

• 2it helps to give us promise that borrower will repay

• 3 if borrower will not repay his loan on time we can take our money back by selling collateral

Answer 2

1. it is the assert that the borrower owns

2. for getting loan

3. in the case of non - repayment of loan the lender has rights to sell his/her collateral