Question

Why does banks and other lenders ask for collaterals while lending?
a) To protect themselves
b) To protect borrowers
c) To waive off the loan amount
d) To threaten the borrower​

Answer 1

Answer:

b) To protect borrowers

Explanation:

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.