what do you mean by collateral in case of a loan?
Answers
Answered by
67
DEFINITION of 'Collateral' Collateral is a property or other asset that a borrower offers as a way for a lender to secure the loan. If the borrower stops making the promised loanpayments, the lender can seize thecollateral to recoup its losses. ... A lender's claim to a borrower'scollateral is called a lien.
Answered by
24
Collateral acts as a property or portion of the assets that a borrower submits to a lender as protection for a loan. And, the borrower is more inclined to compensate the loan if they know they could lose their security in the form of property. Unsecured loans do not apply deposit. An instance of unsecured lending is a company credit card.
Loans that are settled by collateral are typically available at considerably cheaper interest rates than unsecured credits. The borrower has a compelling reason to return the loan on time. If the borrower fails to repay the loan, the lender can embrace the wealth and sell it to recover some or all of the loss of money.
Similar questions