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What is collateral?Why lenders ask for collateral |
| Answer» Collateral is an asset owned by the borrower like land, building etc, and is used as a guarantee to the lender till the loan is repaid. Lenders ask for collateral because:\xa01. It serves as a security against the loan borrowed.\xa02. In case of failure of repayment of the loan, the lender can take the collateral as compensation. | |