Why do lenders ask for collateral while lending?
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Collateral is the main asset owned by borrower that also includes the land, building and many others that are used as guarantee to lender till the loan is repaid.
In fact, the Lenders also ask for the collateral in much more efficient manner.
Collateral serves security against loan borrowed.
Collateral is failure of repayment that the lender can take collateral as the compensation.
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Lenders ask for collateral while lending because if payment of interest and repayment of the principal are not made on time, as the last resort the lenders can sell the collateral assets and recover their money.
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