Question

what is a collateral........in the lesson money and credit....

Answer 1

Answer:

something pledged as security for repayment of a loan, to be forfeited in the event of a default.

Explanation:

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Answer 2

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Collateral:

It is like a security against loans that is demanded by the lenders in against to the interest.

It can also be termed as an asset owned by the borrower like land, jewel, building, etc.; which is used as a guarantee until the loan is repaid.

If the borrower is not able to repay the loan, the lender has the right to sell the asset owned by the borrower to attain the money back.

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Important:

The interest rate, mode of repayment, collateral and the documentations are together called as terms of credit.

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