Economy, asked by adsf9687, 10 months ago

Why do bank demand collateral while issuing a loan?

Answers

Answered by zainakhan1179

Because of evidence of loan.

I hope it will help you

Answered by letmeanswer12

Collateral for Loans

Explanation:

Collateral is an asset that is owned by the borrower. The bank insists on the collateral for the guarantee against their repayment for the credit.
By extending the loan through securing the debt, the creditor is reassured of the financial risks involved because it allows the creditor to take the asset in the event that the debt is not correctly repaid.
Collateral is a promise to the creditor so that the bank can sell the collateral and get the money if the borrower fails to repay the loan.

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