Collateral

What does it mean?
Properties or assets that are offered to secure a loan or other credit. Collateral becomes subject to seizure on default.

In Other Words...
Collateral is a form of security to the lender in case the borrower fails to pay back the loan.

For example, if you open a mortgage, your collateral would be your house. In margin trading, the securities in your account act as collateral in the case of a margin call.

Related Links
Margin Trading Tutorial - Here you can learn about what margin is, how margin calls work, how leverage can have advantages, and why using margin can be risky.

Related Terms
Loan | Margin | Mortgage | Non-Recourse Debt | Overcollateralization | Partial Release | Principal | Unsecured Loan

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