collateral description

Collateral description is a detailed explanation of the specific asset or property pledged as security for a loan. It clearly identifies what the borrower is offering to the lender to ensure repayment, such as real estate, a vehicle, or equipment. A precise description helps both parties understand exactly what is tied to the loan agreement, reducing confusion or disputes if the borrower fails to repay. Essentially, it’s a formal way of pinpointing the asset that the lender can claim or sell to recover the debt, if necessary.