Collateral (finance)

Collateral in finance is something that someone gives a person or group (such as a bank) when they take out a loan. Collateral is given by the person taking the money before the loan starts, and it is given back when it ends. It is given to make sure the person taking the loan will return the money. If they default (fail to pay their debt), the loaner keeps the collateral. Examples include creative rights, a car, or a house.

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Category:Economics