2007-01-30 08:25:10 · 12 answers · asked by colin050659 6 in Education & Reference ➔ Words & Wordplay
Collateral within a financial context is used to indicate assets that secure a debt obligation. For example, in the case of a mortgage, the house serves as the collateral for the mortgage loan. This way, the bank is secured against the default risk of the borrower not being able to meet the interest payments. In case of default, the bank can sell the house and get its money (or at least a part of it) back.
Collateral, especially within banking, may traditionally refer to secured lending (also known as asset-based lending) as well as more recently as collateralisation arrangements to secure trade transactions (also known as capital market collateralization). The former often presents unilateral obligations, secured in the form of property, surety, guarantee or other as collateral (originally denoted by the term security), whereas the latter often presents bilateral obligations secured by more liquid assets such as cash or securities, often known as margin. Another example might be to ask for collateral in exchange for holding something of value until it is returned (ie, I'll hold onto your wallet while you borrow my cell phone).
In many developing countries, the use of collateral is the main way to secure bank financing. The ease of getting credit is associated with the opportunity to use movable and immovable assets as collateral.
2007-01-30 08:32:28 · answer #1 · answered by jude7265 4 · 0⤊ 2⤋
Collaterall is- any asset - as in money, house, shares, etc which can be used to obtain a loan.
Collaterall damage - as in war- is damage to civilians or their property during a conflict
2007-01-30 08:41:44 · answer #2 · answered by coffee 5 · 0⤊ 0⤋
It is something of value that you give someone to hold onto (sign it over) until a loan is paid back. A house deed could be put up for a bank loan, or a guitar could be placed with a pawnbroker to get money. Those are just a couple of examples.
2007-01-30 09:34:40 · answer #3 · answered by meteor 4 · 0⤊ 0⤋
it is another word for your assets ie: your car, house, jewellery it can also be used as a phrase when calculating the equity in your home ie: if you owe x amount & it is now worth y amount the collaterall would be the diference in the middle
2007-01-30 08:35:38 · answer #4 · answered by K W 3 · 0⤊ 0⤋
It is usually property given/pledged against a loan of money. Mr Smith wants to borrow £.1000.00. from Mr. Brown. Mr.Brown does not want to be out of pocket if Mr Smith does not repay the money to him. So he loans Smith the money, but at the same time he takes posses ion of a £.5000.00. Rolex watch, which he will return to Smith if and when Smith repays the money in full at time stated.
2007-01-30 08:44:35 · answer #5 · answered by Social Science Lady 7 · 0⤊ 0⤋
Something that stands good for a loan. Like if you wanted
to borrow some money from the bank, your car or house
could be what stands good for the loan.
2007-01-30 09:57:42 · answer #6 · answered by caroline j 4 · 0⤊ 0⤋
Collateral is what you give up, in case you don't pay the money you borrow. When you buy a car, you borrow money from the bank, your car is a collateral. If you don't pay the monthly payments, the bank will take the car from you.
2007-01-30 08:57:32 · answer #7 · answered by Pluto 3 · 0⤊ 0⤋
security pledged for the payment of a loan: He gave the bank some stocks and bonds as collateral for the money he borrowed.
2007-01-30 08:35:37 · answer #8 · answered by Anonymous · 0⤊ 0⤋
Isn't it a Tom Cruise film.
2007-01-30 22:13:46 · answer #9 · answered by Claire U.K 3 · 0⤊ 0⤋
Something you have in exchange for something you want. you allowo the other person that you want something from to hold onto this until you repay them
2007-01-30 08:37:06 · answer #10 · answered by tlnay025 3 · 0⤊ 0⤋