Entity: COLLATERAL
Collateral refers to property or assets pledged by a borrower to secure a loan, ensuring the lender's interests are protected.
COLLATERAL
Etymology
The term 'collateral' originates from the Latin word 'collaterālis,' meaning 'side by side.'
Definition
Collateral is property or assets pledged by a borrower to a lender as security for the repayment of a loan.
Historical Context
The concept of collateral has been a fundamental aspect of lending practices throughout history, providing a level of assurance to lenders in the event of default by the borrower.
Cultural Significance
Collateral plays a crucial role in the financial industry, influencing loan terms, interest rates, and the overall risk assessment of borrowers.
Related Concepts
Collateral is closely related to concepts such as secured loans, default risk, and asset-backed securities.
See Also
- Secured Loan
- Default Risk
- Asset-Backed Securities
A form of security provided by a borrower to a lender to guarantee repayment of a loan, typically in the form of property or other valuable assets.