What is Collateral?
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Explanation:
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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The term collateral refers to an asset that a lender accepts as security for a loan. The collateral acts as a form of protection for the lender. That is, if the borrower defaults on their loan payments, the lender can seize the collateral and sell it to recoup some or all of its losses.
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