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Learn the meaning of collateral as a noun and an adjective in finance, medicine and business. Find out how to use collateral in a sentence and how to say it in different languages.
Learn the various meanings and uses of the word collateral as a noun and an adjective. Find examples, synonyms, etymology, and related phrases of collateral.
- What Is Collateral?
- How Collateral Works
- Types of Collateral
- Examples of Collateral Loans
- The Bottom Line
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Collateral in the financial world is a valuable asset that a borrower pledges as security for a loan. For example, when a homebuyer obtains a mortgage, the home serves as the collateral for the loan. For a car loan, the vehicle is the collateral. A business that obtains financing from a bank may pledge valuable equipment or real estate owned by the...
Before a lender issues you a loan, it wants to know that you have the ability to repay it. That's why many of them require some form of security. This security is called collateral, which minimizes the risk for lenders by ensuring that the borrower keeps up with their financial obligation. The borrower has a compelling reason to repay the loan on t...
The nature of the collateral is often predetermined by the loan type. When you take out a mortgage, your home becomes the collateral. If you take out a car loan, then the car is the collateral for the loan. The types of collateral that lenders commonly accept include cars—only if they are paid off in full—bank savings deposits, and investment accou...
Residential Mortgages
A mortgage is a loan in which the house is the collateral. If the homeowner stops paying the mortgage for at least 120 days, the loan servicer can begin legal proceedings, which can lead to the lender eventually taking possession of the house through foreclosure. Once the property is transferred to the lender, it can be sold to repay the remaining principal on the loan.
Home Equity Loans
A home may also function as collateral on a second mortgage or home equity line of credit (HELOC). In this case, the amount of the loan will not exceed the available equity. For example, if a home is valued at $200,000, and $125,000 remains on the primary mortgage, a second mortgage or HELOC will be available only for as much as $75,000.
Margin Trading
Collateralized loans are also a factor in margin trading. An investor borrows money from a broker to buy shares, using the balance in the investor's brokerage account as collateral. The loan increases the number of shares the investor can buy, thus multiplying the potential gains if the shares increase in value. But the risks are also multiplied. If the shares decrease in value, the brokerdemands payment of the difference. In that case, the account serves as collateral if the borrower fails t...
You risk losing your collateral if you fail to pay back your debt. So to ensure you keep your car, home, or any other valuable asset being used as collateral on a loan, always make your payments on time to minimize any possibility of defaulting on your debt.
Learn what collateral is and how it works in different types of loans, such as mortgages, car loans, and personal loans. Find out the benefits and risks of using collateral and the types of assets that lenders accept as security.
- Julia Kagan
Collateral is a 2004 American neo-noir action thriller film directed and produced by Michael Mann, written by Stuart Beattie, and starring Tom Cruise and Jamie Foxx. The supporting cast includes Jada Pinkett Smith , Mark Ruffalo , Peter Berg , Javier Bardem , and Bruce McGill .
Aug 6, 2004 · A cab driver gets caught in a deadly game of hits with a contract killer in Los Angeles. IMDb provides cast and crew information, user and critic reviews, trivia, goofs, quotes, and more for this 2004 movie.
- (435K)
- Action, Crime, Drama
- Michael Mann
- 2004-08-06
Collateral definition: property or other assets pledged by a borrower as security for the repayment of a loan. See examples of COLLATERAL used in a sentence.
Victor W "Collateral" is a gripping and stylish thriller that showcases Tom Cruise in one of his most compelling roles. Playing against type, Cruise delivers a chilling performance as Vincent,...
- (239)
- Mystery & Thriller, Crime, Drama
- R
