flag

Made, Stored and
Supported in the USA

Collateral

Collateral describes the personal property or assets that a borrower offers to a lender to secure a loan. As part of the loan agreement, the borrower forfeits the asset to the lender if she stops making payments on the loan. The lender’s claim to the collateral used for a loan is called a lien. Lenders refer to collateral loans as secured loans because the asset secures the funding.