Search results
- DictionaryCol·lat·er·al/kəˈladərəl/
noun
- 1. something pledged as security for repayment of a loan, to be forfeited in the event of a default: "she put her house up as collateral for the bank loan"
- 2. a person having the same descent in a family as another but by a different line.
adjective
- 1. additional but subordinate; secondary: "the collateral meanings of a word"
- 2. descended from the same stock but by a different line: "a collateral descendant of George Washington"
People also ask
What does collateral mean in a sentence?
What is collateral & why is it important?
What is collateral in banking?
What is a collateral property?
Collateral has different meanings as a noun and an adjective. As a noun, it can mean property pledged as security for a loan, a branch of a bodily part, or a secondary fact. As an adjective, it can mean secondary, indirect, or parallel. See examples, synonyms, etymology, and related phrases.
Collateral is a noun that means valuable property used as security for a loan, or a blood vessel or nerve that grows out of the main part. Learn more about the different meanings, usage and examples of collateral in English.
Collateral is a noun or adjective that refers to something pledged as security for a loan, a subordinate part, a relative, or something parallel or aside. Learn the origin, synonyms, and how to use collateral in a sentence with Dictionary.com.
- What Is Collateral?
- How Collateral Works
- Types of Collateral
- Examples of Collateral Loans
- The Bottom Line
- GeneratedCaptionsTabForHeroSec
Collateral in the financial world is a valuable asset that a borrower pledges as security for a loan. For example, when a homebuyer obtains a mortgage, the home serves as the collateral for the loan. For a car loan, the vehicle is the collateral. A business that obtains financing from a bank may pledge valuable equipment or real estate owned by the...
Before a lender issues you a loan, it wants to know that you have the ability to repay it. That's why many of them require some form of security. This security is called collateral, which minimizes the risk for lenders by ensuring that the borrower keeps up with their financial obligation. The borrower has a compelling reason to repay the loan on t...
The nature of the collateral is often predetermined by the loan type. When you take out a mortgage, your home becomes the collateral. If you take out a car loan, then the car is the collateral for the loan. The types of collateral that lenders commonly accept include cars—only if they are paid off in full—bank savings deposits, and investment accou...
Residential Mortgages
A mortgage is a loan in which the house is the collateral. If the homeowner stops paying the mortgage for at least 120 days, the loan servicer can begin legal proceedings, which can lead to the lender eventually taking possession of the house through foreclosure. Once the property is transferred to the lender, it can be sold to repay the remaining principal on the loan.
Home Equity Loans
A home may also function as collateral on a second mortgage or home equity line of credit (HELOC). In this case, the amount of the loan will not exceed the available equity. For example, if a home is valued at $200,000, and $125,000 remains on the primary mortgage, a second mortgage or HELOC will be available only for as much as $75,000.
Margin Trading
Collateralized loans are also a factor in margin trading. An investor borrows money from a broker to buy shares, using the balance in the investor's brokerage account as collateral. The loan increases the number of shares the investor can buy, thus multiplying the potential gains if the shares increase in value. But the risks are also multiplied. If the shares decrease in value, the brokerdemands payment of the difference. In that case, the account serves as collateral if the borrower fails t...
You risk losing your collateral if you fail to pay back your debt. So to ensure you keep your car, home, or any other valuable asset being used as collateral on a loan, always make your payments on time to minimize any possibility of defaulting on your debt.
Collateral is a valuable asset that a borrower pledges as security for a loan. Learn about different types of collateral, such as mortgages, car loans, and margin trading, and how they work.
- Julia Kagan
3 days ago · Collateral is money or property that is used as a guarantee that someone will repay a loan. It can also mean a relative descended from the same ancestor but through a different line, or something that accompanies or supports something else.
Collateral is a security pledged for the repayment of a loan, a person, animal, or plant descended from the same ancestor as another but through a different line, or a side branch of a blood vessel or nerve. Find more meanings, synonyms, translations and related terms from various sources on this web page.
being of second rank or importance or value; not direct or immediate. adjective. serving to support or corroborate. “ collateral evidence” synonyms: confirmative, confirmatory, confirming, corroborative, corroboratory, substantiating, substantiative, validating, validatory, verificatory, verifying. supportive. furnishing support or assistance.
