what is collateral ?why do the banks ask for collateral before lending in brainly
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Collateral is failure of repayment that the lender can take collateral as the compensation. Lenders ask for collateral while lending because if payment of interest and repayment of the principal are not made on time, as the last resort the lenders can sell the collateral assets and recover their money.
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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.
Collateral is demanded by the banks before granting a loan as it is an asset that is owned by the borrower and it's used as a guarantee to the banks until the loan is repaid.
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