2007-08-03 06:17:07 · 2 answers · asked by Anonymous in Business & Finance ➔ Credit
Collateral is something you give them (in name only, not the actual item) that they can keep if you are unable to pay off a loan. With a bank or finance company, this would be either real estate or a car. It can also be stocks, bonds, business assets, etc. You still get to keep and use the item while you are paying off the loan. However, you would not be able to sell the item without their permission until the loan was paid off.
2007-08-03 11:37:33 · answer #1 · answered by Patti C 7 · 0⤊ 0⤋
Simply put: You borrow money from an individual or company and give them temporary title of something of value to hold until you have paid the loan off. For example, you borrow money to buy a car and the loan company holds the title (or puts a lien) on the car until you pay it off. If you don't pay, they will repossess your car.
2007-08-03 14:15:36 · answer #2 · answered by Suzy 5 · 0⤊ 0⤋