noun
adjective
- something pledged as security for repayment of a loan, to be forfeited in the event of a default."she put her house up as collateral for the bank loan"synonymes : security, surety, guarantee, guaranty, pledge, bond, insurance, indemnity, indemnification, pawn, backing, bail, hostage, assurance, gage, earnest
- a person having the same ancestor as another but through a different line.
adjective
- additional but subordinate; secondary."the collateral meanings of a word"
- descended from the same stock but by a different line."a collateral descendant of Robert Burns"
- situated side by side; parallel."collateral veins"
What is collateral and what does it mean to me?
- Strictly speaking, collateral is the asset or assets pledged by a borrower to back up a request for a loan. If the borrower gets the loan and fails to repay it, the lender has the right to seize the asset (i.e. collateral) to make up for the lost income. In the real world, collateral works like this:
What does it mean when something is collateral?
- - A mortgage loan. With a mortgage loan, the collateral is the home/property that the borrower is purchasing. - An auto loan. Like with a mortgage loan, the collateral on auto loan is the vehicle the borrower is buying. - A secured credit card. ... - A personal loan. ... - A margin loan. ... - A small business loan. ...
What is collateral and why is it required?
- The collateral acts as a form of protection for the lender. That is, if the borrower defaults on their loan payments, the lender can seize the collateral and sell it to recoup some or all of its losses. Collateral is an item of value used to secure a loan. Collateral minimizes the risk for lenders.