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Collateral (definition)

The item securing a loan.

Written by Jackson Stone

Updated on March 7th, 2023

Collateral is an item that a person or company takes out a loan for, which the lender can repossess if the borrower fails to make payments. In an automotive loan, for example, the car is the collateral item. You might also hear people talk about the loan being "collateralized" or "secured" by that item

For info on how collateral works in LMS, see Collateral Overview.

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