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Why do banks ask for collateral while giving loans |
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Answer» Bank ask for collateral while giving credit to borrower because if the borrower fails to repay the loan the bank has right to use or sell the collateral given to him by the borrower so that they can get money which they gave him as a loan.if the borrower gives the loan in time than the bank gives collateral back to borrower. Bank needs proper documentation while giving credit.Bank needs collateral for the recovery of money if a borrower is unable to give money back. |
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