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Collateral Assets

Assets that a borrower offers to a lender to secure a loan.

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Collateral are assets pledged by a borrower to secure a loan or credit. If the borrower defaults on repayment, the lender can seize the collateral to recover the loan amount. Collateral reduces the risk for lenders and can lead to more favorable loan terms. Types of collateral include real estate, vehicles, equipment, stocks, bonds, and inventory.
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