Question

What is a colateral?What happens if a borrower fails to repay the loan?Give some examples of collateral?

Answer 1

Answer:

The term Collateral refers to an asset that a lender accepts as security for a loan.

Explanation:

If borrower fails to repay the loan ?

• The borrower defaults on their loan payments, the lender can seize the collateral and sell it to recoup some or all of its losses.
• The collateral acts as a form of protection for the lender.

Examples:

• Collateral may take in the form of real estate or other kings of assets, depending on the purpose of the loan.