collateral
Say it: kuh-LAT-uh-rul /kəˈlætərəl/ · noun
What “collateral” means
Something a lender can take if you don't repay.
More precisely: Something pledged as security for a loan, which the lender can take if it isn't repaid.
Example: “The bank wanted their house as collateral for the business loan.”
When to use it
When discussing secured loans, especially what property a borrower promises the lender if repayments fail. It is a formal financial term.
Similar words
security, guarantee, surety
Where it comes from
From medieval Latin collateralis, "side by side."
Quick check
A lender agrees to fund your café but can take your delivery van if you fail to repay. The van is…
collateral or a deposit?
Show the answer
collateral
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