What is collateral?
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In lending agreements, collateral is a borrower's pledge of specific property to a lender, to secure repayment of a loan....
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Collateral is an asset that a lender accepts as security for extending a loan. If the borrower defaults on her loan payments, the lender may seize the collateral and sell it to recoup some or all of his losses. Collateral can take the form of real estate or other kinds of assets, depending on what the loan is used for.
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