Collateral

Collateral is an asset that a borrower offers to a lender to secure a loan. If the borrower fails to repay the loan, the lender has the right to seize the collateral to recover their losses. This reduces the risk for the lender, allowing them to offer loans at lower interest rates or to borrowers with lower creditworthiness.
Common types of collateral include real estate, vehicles, stocks, or any valuable property.