Collateral Flashcards
1
Q
What is collateral?
A
Is an asset or something of value that a borrower provides as security to get a loan from a buyer.
2
Q
What are assets that can be used as collateral?
A
- property
- building
- vehicle
- the deed of the business
3
Q
What is the value of collateral?
A
The value of collateral to the borrower will be able to get access to money that they probably will not have if there was no collateral.
4
Q
What is the value of collateral to the lender?
A
Gives them security if the borrower cannot pay.
5
Q
What are consequences of collateral?
A
If the business the loan is used for is not successful or fails, the entrepreneur loses the assets they used as collateral.
