collateral
Sign in to saveasset pledged to secure fulfillment of a financial obligation (e.g. a loan)
Wikidata facts
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- different from
- guarantee
- used by
- security interest
- facet of
- default
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Encyclopedic overview
Pawning is an example of a common type of loan secured with collateral
In lending agreements, collateral is a borrower's pledge of specific property to a lender, to secure repayment of a loan. The collateral serves as a lender's protection against a borrower's default and so can be used to offset the loan if the borrower fails to pay the principal and interest satisfactorily under the terms of the lending agreement.
Excerpted from Wikipedia’s “collateral” article, available under the CC BY-SA 4.0 licence.