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What is collateral? Explain. |
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Answer» An asset that is owned by borrowers and uses as a guarantee to a lender till loan time loan is repaid Collateral is an asset that the borrower owns (such as lands, buildings ,vehicles ,livestock and deposits with bank ) and uses this as a guarantee to a lender until the loan is repaid. Collateral is an asset or form of physical wealth that the borrower owns like house, livestock, vehicle etc. It is against these assets that the banks provide loans to the borrower. Collateral is an asset or form of physical wealth that the borrower owns like house, livestock, vehicle etc. It is against these assets that the banks provide loans to the borrower. The borrower uses assets as a guarantee to a lender until the loan is repaid. |
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