Question

what do u meant by the term collateral

Answer 1

Collateral is a guarantee given by the borrower to the lender. A collateral is an asset owned by the borrower like it can be gold, house, car etc.
 In case if the borrower is unable to return the loan to the lender, the lender will have full access to the collateral of the borrower.
The value of the collateral is a little more than the amount of loan. So the lender can sell it in case, loan not returned.