Question

Why do bank ask for collateral by giving lones

Answer 1

Hey mate...

Here your answer....

Banks ask for a collateral because it is the security provided by a borrower ( such as land, building, vehicle, livestock,deposits with bank) against a loan , and it can be sold in case of non repayment.

Hope this will help you..

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Answer 2

Collateral is a guarantee to the bank so that if borrower fails to repay the lon, the bank can sell the collateral and obtain the amount. It is a reassurance to the bank as without collateral the bank has no way to get back the money in case of failure of repayment