Question

Why do leaders ask for collateral while lending.

Answer 1

Answer:

Lenders ask for collateral as security against loans. If the borrower fails to repay the loan, the lender has the right to sell the asset-or collateral to recover the payment. Collateral assets (such as land, vehicle, etc.) ... It is for this reason that lenders ask for collateral while lending.

Explanation:

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Answer 2

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1. Collateral is an asset that the borrower owns and uses this as guarantee to a lender.
2. It is a security or guarantee until the loan is repaid.
3. If the borrower fails to repay the loan, the lender has the right to sell the asset or collateral to obtain payment.