Economy, asked by preetpalss, 1 year ago

why do banks or lenders demand collateral against loan

Answers

Answered by lenabiju33

Explanation:

collateral is an asset which is owned by the borrowers which the banks take as a gurantee .if the borrowers fails to repay the loan the lender has the legal permission to sell the collateral to obtain payment.

Answered by Cricetus

Demand of collateral against loan

Explanation:

Collateral security is an asset pledged as security against a loan by the borrower to the lender of the loan.
if the borrower is not able to make payment of the loan on time then the lender has right to sale the collateral and recover the money.
so whenever any bank or any lender gives loan to anyone they demand collateral so that they can feel assured about the recovery of loan amount.
it acts as a protection to the lender. if the lender gives loan without collateral then he may face big losses.

Learn more:

Collateral against loan

https://brainly.in/question/12924617

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