Question

what are collateral?

Answer 1

the asset that the borrower owns and uses this as a guarantee to a lender until the repayment of loan is called collateral. for Eg. -land,building,vehicle,etc.


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Answer 2

Explanation:

Collateral is a term which is most often used in the banking sector, especially in the department which deals with loan and fund sanctions and also in other places where money lending and borrowing happens.

The lending agreement of the lender has pledge called collateral in which the borrower pledges specific property to the lender in order to assure that he will repay the money and will get his collateral back. In case if the borrower fails to repay the money, the Collateral will be owned by the lender.