Question

Why do lenders 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

Answer:

The lenders ask for a collateral before lending because: It is an asset that the borrower owns and uses this as a guarantee to the lender – until the loan is repaid. Collateral with the lender acts as a proof that the borrower will return the money.