Collateral
Property or assets that are committed by an individual in order to guarantee a loan. Upon default, the collateral becomes subject to seizure by the lender and may be sold to satisfy the debt.
EXAMPLE
In securing a mortgage, the borrower may offer the house as collateral.
Definition from Nolo’s Plain-English Law Dictionary
Property that someone promises or gives to a creditor to guarantee payment of a debt -- thus creating what's called a secured debt. If the borrower defaults on the loan, the creditor may seize the property and sell it to cover the debt.
Definition provided by Nolo’s Plain-English Law Dictionary.
August 19, 2010, 5:12 pm
Example provided by www.investopedia.com/terms/c/collateral.asp
