Collateral is an asset (either tangible or intangible) that a borrower offers lenders to guarantee a loan repayment.
Collateral Extended Definition
Collateral is offered by a borrower to a lender as security as loan repayment. The collateral can be in the form of:
- Other physical property
- Investment funding
- Payment rights
- Accounts receivable
Collateral is the secondary source of payment for the loan. The first source being cash payments. The lender would seize the collateral after loan repayment failure.
What Is Collateral? | Patriot Software
Last Updated By
Christan Neff | Apr 17, 2023