What is Collateral? Why do lenders ask for Collateral while lending?
Answers
Explanation:
In lending agreements, collateral is a borrower's pledge of specific property to a lender, to secure repayment of a loan.Lenders ask for collateral as security against loans. If the borrower fails to repay the loan, the lender has the right to sell the asset-or collateral to recover the payment. ... It is for this reason that lenders ask for collateral while lending.
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Answer:
collateral is a security that ensures that if someone is not able to pay loan payment
the lender can get back the payment by getting the collateral...lendres ask for collateral because it is a security that ensures that their money will be returned to them.. eg:- car, property, home, shop, jewellery, etc...