rhizoverbBeta
DictionarycollateralLoan security
noun

collateral

kuh-LAT-er-uhl/kəˈlætərəl/

Property pledged to secure a loan.

The borrower offers the car as collateral for the loan.

A borrower handing a car key across a bank desk beside an unlettered loan agreement, small clear car visible through window; lender and borrower seated, pledge of property, no printed terms or captions.
Etymology
colLatinwith, together
+lateralLatinof the side

The pieces evoke something accompanying another thing at its side. In collateral security, this became secondary support for an obligation: property pledged to back repayment of a loan.

In context

ColumbiaLearn5:00
their money from the North. That's where the money is. They're getting credit from the North and they're distributing it around. And they're pledged a share of the crop as collateral.
MOOC | The Crop Lien and Its Consequences | The Civil War and Reconstruction, 1865-1890 | 3.6.5

More examples

  • The bank required additional collateral.
  • Her house served as collateral.
  • They recovered the collateral after the debt was repaid.

Forms

collateral

Similar words

security
The broader financial term for an asset backing an obligation.
pledge
A pledge can be a promise rather than property securing repayment.