Question

When do we say that a borrower is in debt -trap?
What do you mean by the term collateral?
Why do lenders ask for collateral while lending?

Answer 1

Ans-1. When the borrower is unable to pay the previous credit amount and has to take fresh loans or credit.

Ans-2. It is an asset that the borrower owns and uses this as a guarantee to a lender until the loan is repaid.

Ans-3. It gives security against loans to the lenders.

Answer 2

Answer :-

When the person is not able to pay the credit amount of the past time then he is said to be debt trap.

Answer :-

Collateral is a asset that a borrower offers as a way for a lender to secure the loan.

Answer :-

For security purpose.

Thanks❤