Anonymous
Anonymous asked in Business & FinancePersonal Finance · 1 decade ago

what is collateral????????????????????????????????

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  • Gem
    Lv 7
    1 decade ago
    Best Answer

    Depends on the usage.

    Collateral can mean an asset used as guarantee for a loan. Like you use your paid for house to finance another loan.

    Or, it can mean advertising brochures, etc.

    The company's collateral is unprofessional and shoddy.

  • 1 decade ago

    Collateral (finance) in finance means a security or guarantee (usually an asset) pledged for the repayment of a loan if one cannot procure enough funds to repay. Can also be an exchange for voting rights.

    col·lat·er·al /kəˈlætərəl/ Pronunciation Key - Show Spelled Pronunciation[kuh-lat-er-uhl] Pronunciation Key - Show IPA Pronunciation

    –noun 1. security pledged for the payment of a loan: He gave the bank some stocks and bonds as collateral for the money he borrowed.

    2. Anatomy. a. a subordinate or accessory part.

    b. a side branch, as of a blood vessel or nerve.

    c. collateral circulation.

    3. a relative descended from the same stock, but in a different line.

    –adjective 4. accompanying; auxiliary: He received a scholarship and collateral aid.

    5. additional; confirming: collateral evidence; collateral security.

    6. secured by collateral: a collateral loan.

    7. aside from the main subject, course, etc.; secondary: These accomplishments are merely collateral to his primary goal.

    8. descended from the same stock, but in a different line; not lineal: A cousin is a collateral relative.

    9. pertaining to those so descended.

    10. situated at the side: a collateral wing of a house.

    11. situated or running side by side; parallel: collateral ridges of mountains.

    12. Botany. standing side by side.

    http://dictionary.reference.com/browse/collateral

  • 1 decade ago

    Collateral is something you put up of value to take out a loan.

    For example in a home equity loan the house would be collateral. In a business loan you could borrow against your

    equipment.

  • fredia
    Lv 4
    3 years ago

    What Is Collateral

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  • 1 decade ago

    An object you give to something that is worth about the same as the object you borrow from someone.

    1 : a collateral relative

    2 : property (as securities) pledged by a borrower to protect the interests of the lender

    3 : a branch of a bodily part (as a vein)

    Source(s): www.m-w.com
  • 1 decade ago

    Collateral is something that you put up for security when you apply for some loans. For example, if you are looking to take out a loan for a house, you may be required to put up your car as a guarantee that you won't default on your loan. In the event of a loan default, the bank will then own your car in this example. Hope that helps.

  • 1 decade ago

    collateral is something of value that is taken by banks to secure a loan

    collateral could be a house or car or certificate of deposit

    if you default on the loan the bank will keep the collateral

  • Anonymous
    1 decade ago

    Collateral (finance)

    In lending agreements, collateral is a borrower's asset that is forfeited to the lender if the borrower is insolvent—that is, unable to pay back the principal and interest on the loan. When insolvent, the borrower is said to default on the loan, in which case the lender becomes the owner of the collateral. In a mortgage, for instance, the real estate being acquired with the help of the loan serves as collateral. Should the buyer fail to pay mortgage interest, the ownership of the real estate is transferred to the bank in the process known as foreclosure.

    or

    Concept of collateral

    Collateral, especially within banking, may traditionally refer to secured lending (also known as asset-based lending) as well as more recently as collateralisation arrangements to secure trade transactions (also known as capital market collateralization). The former often presents unilateral obligations, secured in the form of property, surety, guarantee or other as collateral (originally denoted by the term security), whereas the latter often presents bilateral obligations secured by more liquid assets such as cash or securities, often known as margin. Another example might be to ask for collateral in exchange for holding something of value until it is returned (e.g., I'll hold onto your wallet while you borrow my cell phone).

    In many developing countries, the use of collateral is the main way to secure bank financing. The ease of acquiring a loan depends on the ability to use assets, whether real estate or any other, as collateral.

  • Anonymous
    1 decade ago

    http://en.wikipedia.org/wiki/Collateral

    so in other words a collateral is a tool for the banks to protect themselves say when you take out a loan, in case you fall default (fail to pay timely dues), they'll have your collateral to fall back on, which can be a property or asset or both--like your home your money.

    do not fall default.

  • 1 decade ago

    Its like if you ask someone for something like money or just anything you want to boorrow collateral would be something of value of yours that they would hold until you paid them back or returned what you borrowed

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