Question

what do you understand by collateral ? why it is considered necessary ?
n.c.e.r.t class 10 chapter 3 economic s.st​

Answer 1

Explanation:

Before a lender issues you a loan, it wants to know that you have the ability to repay it. That's why many of them require some form of security. This security is called collateral which minimizes the risk for lenders. It helps to ensure that the borrower keeps up with their financial obligation.

Answer 2

Explanation:

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