What is collateral meaning?

Collateral refers to assets or property that are pledged as security or guarantee for a loan or debt. In the event that the borrower is unable to repay the amount borrowed or fulfill their financial obligations, the lender has the right to use the collateral to recover their losses. Collateral can take many forms, including real estate, vehicles, investments, and jewelry. It is important to note that the value of collateral may fluctuate, and lenders may require certain conditions or restrictions on how the collateral can be used or transferred. Collateral is commonly used in secured loans, mortgages, and other forms of borrowing in which the lender seeks to mitigate their risk by having a form of security.