Collateral

RECENT NEWS
MarketWatch  Aug 3  Comment 
Faraday Future, a high-profile electric-car startup, has pledged its corporate headquarters in Los Angeles as collateral to secure a rescue loan intended to keep the lights on while it seeks new investors, according to people familiar...
Forbes  Jul 26  Comment 
If you’re going to invest in print, make it amazing.
Mondo Visione  Jul 18  Comment 
South African market participants can now enjoy unprecedented automation and straight-through processing by leveraging newly available, integrated cloud-based technology to exchange tri-party SWIFT1 messaging for collateral instructions,...
The Economic Times  Jul 3  Comment 
Under the new law Real Estate (Regulation and Development) Act, 2016 (RERA), a developer will have to maintain 70% money collected from home-buyers in a separate account.
The Hindu Business Line  May 29  Comment 
Collateral Medical, an online distributor of medical devices, has raised $3.5 million (₹23 crore) in a Series A investment from Small and Medium Enterprises-focussed private-equity fund Carpediem Cap...
Motley Fool  May 17  Comment 
Real-life questions answered.
Mondo Visione  May 16  Comment 
TriOptima, a NEX Group business which lowers costs and mitigates risk in OTC derivatives markets, announces today that its triResolve Margin service was voted Best Collateral Management Solution in the FTF News Technology Innovation...
Reuters  Apr 14  Comment 
Japan's Toshiba Corp is likely to win creditors' approval for offering its prized memory chip business stake as collateral for new loans and loan commitments worth around 1 trillion yen ($9.2 billion), sources briefed about the matter said on Friday.
Japan Today  Apr 4  Comment 
Toshiba Corp has asked creditor banks for a new loan and offered as collateral a stake in its memory chip unit that is being split off, sources said, underlining the firm's growing financial woes as it braces for a multi-billion dollar...




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Collateral is an asset or assets offered by a borrower in order to procure a loan. Should the borrower default on his payment(s), the lender would take possession of the collateral, which may then be sold to recoup the lender's losses.

Technically, collateral could be any asset, though typically it takes the form of personal property, investment securities, or real estate, the values of which can be readily determined.

Other terms in common use in the market are"margin", "margin asset" and "margin agreement" and similar terms using "credit support" instead of "collateral" or "margin," collateral", "collateral asset" and"collateral agreement." [1]

When a lender offers a loan against collateral offered by the borrower, the lender is said to take a security interest in the collateral. [2]

Examples

  • A woman takes out a mortgage to pay for her home. As collateral, she offers the home itself. Should she default on the loan, the lender (typically a bank) would take possession of the home. The bank may then sell the property to recoup its losses.
  • A man needs a cash loan to pay for several large, immediate expenses. As collateral, he offers the lender his car. Should he default on the loan the lender would take possession of the car, which he or she may sell to recoup losses.
  • In Uruguay, no private bank would accept cattle as collateral for a loan. By contrast, in Kansas, cattle are considered the best collateral for a loan.

14c., "accompanying," also "descended from the same stock," "side by side, "together" "parallel, along the side of" 16c., "colleague, associate." Meaning "thing given as security" is from 1832, Amer.Eng., from plrase collateral security (1720). [3]

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