Question

why do lenders ask for collateral while lending

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Answer 1

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. It is for this reason that lenders ask for collateral while lending.

Answer 2

Answer:

Collateral is an asset owned by the borrower like land, building etc, and is used as a guarantee to the lender till the loan is repaid. Lenders ask for collateral because: ... In case of failure of repayment of the loan, the lender can take the collateral as compensation

Explanation:

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