MANAGEMENT

Detailed explanation-1: -What is Collateral? 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 an asset that is used by a lender to secure a debt or loan and can include cash, stocks, bonds, and other equity or securities. A pledged asset is collateral held by a lender in return for lending funds.

Detailed explanation-3: -Collateral is an asset that the borrower owns (such as land, building, vehicle, livestocks, deposits with banks) and uses this as a guarantee to a lender until the loan is repaid. If the borrower fails to repay the loan, the lender has the right to sell the asset or collateral to obtain payment.

Detailed explanation-4: -A secured loan is a loan in which the borrower pledges some asset (e.g. a car or property) as collateral for the loan, which then becomes a secured debt owed to the creditor who gives the loan.

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.