Question

What is collateral explain it for 4 marks

Answer 1

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 loan payments, the lender can seize the collateral to recoup its losses. Since collateral offers some security to the lender should the borrower fail to pay back the loan, loans that are secured by collateral typically have lower interest rates than  unsecured loans. A lender's claim to a borrower's collateral is called a lien.

Answer 2

Hii!!

Collateral is an asset which is kept as security for the payment of loans/credit..

for example jewellery ,car, home and many more......
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hope it helps u....✌