Financial Terms / C - D / Collateral
Collateral
Collateral is any asset that a lender can seize from the borrower if the borrower fails to pay back the loan and/or interest under the agreed terms of the loan.
For example, when you take out a mortgage, your home is the collateral, and when you take an auto loan, the car is the collateral. The lender will seize your house/car if you fail to repay your loan.
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