Definition, Meaning & Synonyms
collateral
noun
/kəˈlæt.ə.rəl/
Definition
Something pledged as security for repayment of a loan, to be forfeited in the event of a default.
Examples
- The bank required collateral for the loan, which could be a car or property.
- If you can’t pay back the loan, the lender can take your collateral.
- Many startups struggle to provide sufficient collateral for funding.
Meaning
In finance, collateral refers to an asset that a borrower offers a lender to secure a loan. If the borrower fails to repay, the lender can claim the collateral to recover their losses.
Synonyms
- security
- pledge
- guarantee
- assurance
- backup