What do you mean by the term collateral?

collateral noun (SECURITY FOR DEBT ) valuable property owned by someone who wants to borrow money, that they agree will become the property of the company or person who lends the money if the debt is not paid back: use something as collateral She used her house as collateral for a loan.
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What do you mean by collateral?

In lending, collateral is typically defined as an asset that a borrower uses to secure a loan. Collateral can take the form of a physical asset, such as a car or home. Or it could be a financial asset, like investments or cash. Lenders may require collateral for certain loans to minimize their risk.
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What is a collateral term?

In general terms, an asset, or assets, that are provided as security by a collateral provider, or over which a security interest has been created, to secure a liability owed to the collateral taker.
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What is collateral in short terms?

In short, collateral means the asset a borrower pledges to a lender to secure a loan. If the borrower can't keep up with payments, the lender can seize that item to recover losses.
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What is the collateral answer?

Collateral is an asset that the borrower owns (such as land, building, vehicle, livestocks, deposits with banks) and uses this as a guarantee to a lender until the loan is repaid.
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What do you mean by the term collateral?

What is collateral also called?

4.6. Collateral are the assets that one puts up in order to secure the desired credit or loans. Such collateral against loans are known as Security.
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What is collateral class 11?

Collateral is an asset or form of physical wealth that the borrower owns like house, livestock, vehicle etc. It is against these assets that the banks provide loans to the borrower. The borrower uses assets as a guarantee to a lender until the loan is repaid.
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What does collateral use mean?

Collateral is something of value that a borrower pledges at a bank or credit union's request to mitigate the financial institution's risk in the event of nonpayment. If the customer or member defaults on the loan, the institution will take the item pledged to recover the money lent.
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What does collateral mean in life?

Collateral assignment of life insurance involves using your life insurance policy's death benefit as loan collateral. 1. This means that if you can't repay what you owe, the lender has the right to collect the collateral amount from your policy.
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What are the terms of credit class 10?

Every loan agreement specifies certain conditions or terms like interest payments , collateral and documentation requirement , and the mode of repayment , they together comprise what is called terms of credit .
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Why is it called collateral?

The adjective collateral is derived, via Anglo-French, from Medieval Latin collateralis, a combination of the prefix com- (the prefix is col- when used before the letter l), meaning "with, together, or jointly," and lateralis, meaning "lateral." Lateral itself is ultimately from Latin latus, which means "side" and ...
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Which is an example of collateral?

What Is Collateral? Collateral is a valuable asset that a borrower pledges as security for a loan, serving thus as a guarantee for the lender. For example, when a homebuyer gets a mortgage, the home serves as the collateral for the loan. For a car loan, the vehicle is the collateral.
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What does no collateral mean?

A Personal Loan without collateral requires no security or collateral from the borrower. Instead of relying on collateral, lenders assess the borrower's creditworthiness by considering factors such as credit history, income stability, and debt-to-income ratio.
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Where is collateral?

Early drafts of Collateral's script set the film in New York City. Later revisions of the script moved the film's setting to Los Angeles.
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What is the literal meaning of collateral?

noun. Finance., property or other assets pledged by a borrower as security for the repayment of a loan. He gave the bank stocks and bonds as collateral for the money he borrowed. Anatomy. a subordinate or accessory part.
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What are the types of collateral?

Types of collaterals in loans
  • Real estate: Residential houses, plots, or commercial properties are widely accepted as security assets for home loans and business loans.
  • Fixed deposits and investments: FDs, bonds, or equity can be pledged to get loans.
  • Gold and jewellery: ...
  • Vehicles: ...
  • Insurance policies:
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What is collateral in short answer?

Collateral is an asset that has a specific value and which a borrower can offer as security for a loan to ensure the lender gets their money back if the loan isn't repaid. It can include tangible items, such as a building or equipment, or intangible assets, such as intellectual property.
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Which of the following best defines collateral?

Collateral refers to an asset that a borrower pledges to a lender as security for a loan. If the borrower fails to repay the loan (defaults), the lender has the right to claim the collateral to recover the owed amount.
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What is the meaning of collateral in maths?

is an asset pledged by a borrower to secure a loan or other credit and is forfeited to the lender in the event of the borrower's default. NC State University North Carolina State University Raleigh, NC 27695 919.515.2011.
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What is collateral?

As a noun, collateral means something provided to a lender as a guarantee of repayment. So if you take out a loan or mortgage to buy a car or house, the loan agreement usually states that the car or house is collateral that goes to the lender if the sum isn't paid.
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What is the meaning of collateral free?

A collateral-free education loan is a student loan provided without requiring assets as security. Lenders approve such loans based on academic merit, co-applicant income, and creditworthiness, often backed by government schemes. Difference between collateral-free loans and loan against securities.
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What is collateral use?

Perhaps most notably the CPR restricts so called collateral use, meaning that documents can only be deployed for the purpose of the proceedings in which they were disclosed. This important security, afforded to disclosing parties, may yet be lost.
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What is a collateral in free dictionary?

collateral (countable and uncountable, plural collaterals) (finance) A security or guarantee (usually an asset) pledged for the repayment of a loan if one cannot procure enough funds to repay.
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Is it collateral or collateral?

Collateral is an item of value, such as property or assets, that is pledged by an individual (borrower) in order to guaranty a loan. Upon default, the collateral becomes subject to seizure by the lender and may be sold to satisfy the debt. The value of collateral is not based on the market value.
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What can you use as collateral for a loan?

Borrowers can use a wide range of assets as collateral for loans, including:
  • Real estate/property.
  • Cars, boats.
  • Jewelry, fine art, antiques.
  • Stocks, bonds, insurance policies.
  • Non-retirement savings and investments.
  • Cash, precious metals.
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