MANAGEMENT

Detailed explanation-1: -Collateral is an asset pledged by a borrower, to a lender (or a creditor), as security for a loan.

Detailed explanation-2: -A pledged asset is collateral held by a lender in return for lending funds. Pledged assets can reduce the down payment that is typically required for a loan as well as reduces the interest rate charged. Pledged assets can include cash, stocks, bonds, and other equity or securities.

Detailed explanation-3: -Collateralized Personal Loans Another type of borrowing is the collateralized personal loan, in which the borrower offers an item of value as security for a loan. The value of the collateral must meet or exceed the amount being loaned.

Detailed explanation-4: -Hypothecation comes into the picture when an asset is pledged as collateral to secure a loan. Income generated by the asset such as title, possession or ownership rights, etc is not given up by the owner of the asset. However, if the terms of the agreement are not met, the lender can seize the asset.

Detailed explanation-5: -A collateral loan is a type of secured loan requiring a borrower to pledge an asset to avail of the loan. The asset, called a ‘collateral, ’ is liquidated by the lender in case the borrower defaults. On the other hand, unsecured loans do not require the borrower to pledge collateral.