Question
Download Solution PDF________ is an asset that the borrower owns and uses as a guarantee to a lender, until the loan is repaid.
Answer (Detailed Solution Below)
Detailed Solution
Download Solution PDFThe correct answer is Collateral.
Key Points
- Collateral
- An asset that the borrower owns and uses as a guarantee to the lender until the loan is repaid is called collateral.
- Collateral is a type of security that banks take from their clients.
- The collateral can be in the form of fixed deposits, property papers etc.
- The collateral reduces the risk to the lenders.
- If a borrower defaults on the loan, the lender can seize the collateral and sell it to cover his loss.
- Mortgage and car loans are two types of collateralized loans.
- Other personal assets, such as a savings or investment account, can be used to secure a collateralized personal loan.
Last updated on Jun 30, 2025
-> The Staff Selection Commission has released the SSC GD 2025 Answer Key on 26th June 2025 on the official website.
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