Definition: Collateral refers to any property or asset that is pledged as security for a loan, guaranteeing repayment of the principal amount. This collateral can be tangible (such as a car) or intangible (such as a piece of jewelry). Collateral is often used in financial transactions and can protect creditors from defaulting on loans. In a typical scenario, a borrower may borrow money from a lender who holds collateral such as a vehicle or other asset to ensure repayment. The collateral serves as a security for
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