What is collateral?
An example of an AI chatbot conversation about understanding collateral in finance.
What is collateral?
Collateral is an asset that a borrower offers to a lender to secure a loan. If the borrower defaults, the lender can seize the collateral.
Can you give me some examples of collateral?
Sure! Common examples of collateral include real estate, vehicles, stocks, and savings accounts.
How does collateral affect loan approval?
Collateral can improve loan approval chances by reducing the lender's risk. It shows the lender that the borrower is serious about repaying the loan.
What happens if I can't repay a loan with collateral?
If you can't repay the loan, the lender has the right to take possession of the collateral to recover their losses.
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