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Mar 8, 2022 · Issue of DEBENTURES | Collateral security | Class 12 | Term 2 | Part
- 14 min
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- Rajat Arora
Collateral security may be defined as a subsidiary or secondary or additional security besides the primary security when a company obtains a loan or overdraft from a bank or any other financial institution. Was this answer helpful?
Jan 6, 2022 · The possible loss of your asset ensures you repay the loan on time. The nature of the loan determines what is the collateral. For example, if you take out a home loan, the security will be the property. Similarly, the car is the security when you avail of a vehicle loan. Moreover, other types of borrowings can be secured against various assets.
Collateral is a key component of many loans, providing security for the lender and often enabling better loan terms for the borrower. Whether it's a house, car, or investment, understanding how to use your assets as collateral can open up financial opportunities and help you achieve personal or business goals.
Sep 14, 2023 · Collateral security is a fundamental concept in finance, serving as a vital risk management tool for lenders and enabling borrowers to access credit on favorable terms. Understanding the role of collateral security and its nuances is essential for making informed financial decisions and managing financial obligations effectively.
Jan 31, 2022 · Collateral represents some type of property that you own that you offer as security in order to obtain a loan. The item you offer should have value, and it is something the lender can repossess if you don’t make payments. With collateral, you reduce the risk the lender takes on because it can use the security you provide to recoup some of the ...
Dec 20, 2022 · Security Agreement: A document that provides a lender a security interest in a specified asset or property that is pledged as collateral. In the event that the borrower defaults , the pledged ...
