Collateral Definition

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:

• Buildings
• Land
• Vehicles
• 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.

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Last Updated By

Christan Neff | Apr 17, 2023