Definition of

Collateral

Collateral
In Finance, collateral is property that a borrower promises to give to a lender if they can't pay back a loan.

Example: you borrow $2,000 and use your car as collateral. If you don't pay back the loan according to the agreement (maybe you miss a monthly payment) they can take your car. Ouch.
 
Copyright © 2018 MathsIsFun.com