what is Collateral ? write four terms of credit.
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Answer:
property or something valuable that you agree to give to somebody if u cannot pay back that you have borrowed
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Explanation:
- Collateral is an asset that the borrower owns (such as land, building, vehicles, livestock, deposits with banks) and uses this as a guarantee to a lender until the loan is repaid.
- If the borrower fails to repay the loan, the lender has the right to sell the asset or the collateral to obtain the payment.
- Property such as land, livestock etc are some of the common examples of collateral used for borrowing.
The four terms of credit are:
- Interest rates.
- Callateral.
- Documentation required.
- Mode of repayment.
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