ECONOMICS (CBSE/UGC NET)

Detailed explanation-1: -The asset that a borrower owns and uses as a guarantee until a loan is repaid to a lender is known as collateral.

Detailed explanation-2: -Collateral is an asset of some sort that a borrower pledges as a guarantee of repayment of a debt or loan. Should the borrower default on the agreed repayments, the lender would have the right to take possession of the pledged asset, known as collateral.

Detailed explanation-3: -Collateral is simply an asset, such as a car or home, that a borrower offers up as a way to qualify for a particular loan. Collateral can make a lender more comfortable extending the loan since it protects their financial stake if the borrower ultimately fails to repay the loan in full.

Detailed explanation-4: -1. A is a loan, secured by a collateral, that the borrower is obliged to pay at specified terms. 1. Answer: mortgage 2.

Detailed explanation-5: -Loans that require collateral are called secured loans. But while collateral can sometimes be necessary or help you unlock a better deal, it’s by no means required. You can also qualify for unsecured loans, which do not require collateral and are approved based on your credit score and financial reportings.