Question

what is collateral?why do lenders ask for collateral while lending money?​

Answer 1

Answer:

Hey pal here's ur answer

Explanation:

Collateral is an asset owned by the borrower like land, building etc, and is used as a guarantee to the lender till the loan is repaid. Lenders ask for collateral because:

1. It serves as a security against the loan borrowed.

2. In case of failure of repayment of the loan, the lender can take the collateral as compensation.

Thank me later:)

Answer 2

Answer:

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.

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

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Explanation: