Property that is pledged to the lender in the event that a borrower cannot make his or herdebt payment is calledA) collateral.B) points.C) interest.D) good faith money.
Question
Property that is pledged to the lender in the event that a borrower cannot make his or herdebt payment is calledA) collateral.B) points.C) interest.D) good faith money.
Solution 1
Property that is pledged to the lender in the event that a borrower cannot make his or her debt payment is called:
A) Collateral.
Collateral is an asset or property that a borrower offers to a lender as security for a loan. If the borrower fails to repay the loan as agreed, the lender has the right to seize the collateral and sell it to recover the outstanding debt. This reduces the risk for the lender and can make it easier for borrowers to obtain loans. Common forms of collateral include real estate, vehicles, and business inventory or equipment.
Solution 2
The property that is pledged to the lender in the event that a borrower cannot make his or her debt payment is called A) collateral.
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