Why do lenders collateral from lending?
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Collateral is a property or other asset that a borrower offers as a way for alender to secure the loan. ... Since collateral offers some security to thelender should the borrower fail to pay back the loan, loans that are secured bycollateral typically have lower interest rates than unsecured loans.
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Collateral is the security which is owned by a person who is taking the loan. The security can be car,bike,house and many other things.
In case if a person is unable to pay loan,the bank has right to sell that collateral for taking the money to complete loan.
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