Advertisement

Financial lending transactions use collateral to add an extra layer of security for lending companies. If you are ever involved in any situation involving large-scale loans, it is essential to have a good understanding of what it is and how it works in general.

Advertisement

1. Collateral Explained and Clarified

Collateral is property or another asset with value that a borrower will offer to a lender to secure a loan. The lender can seize the collateral if the borrower defaults on their payments, allowing the lender to recoup their losses. In most cases, these assets remain in place until the borrower fully repays the loan.

ebstock / Getty Images

Advertisement

More on Facty

Disclaimer

This site offers information designed for educational purposes only. The information on this Website is not intended to be comprehensive, nor does it constitute advice or our recommendation in any way. We attempt to ensure that the content is current and accurate but we do not guarantee its currency and accuracy. You should carry out your own research and/or seek your own advice before acting or relying on any of the information on this Website.