Definition, Meaning & Synonyms
collateral
noun
kəˈlateral
Definition
Collateral refers to something pledged as security for repayment of a loan, to be forfeited in the event of a default.
Examples
- The bank required collateral to secure the loan.
- He offered his car as collateral for the business loan.
- If you cannot provide collateral, you may need a co-signer.
Meaning
In finance, collateral is an asset that borrowers offer to lenders to secure a loan. If the borrower fails to repay the loan, the lender can take possession of the collateral.
Synonyms
- Security
- Guarantee
- Back-up
- Assurance
