Collateralized Financing

Collateralized financing is a lending arrangement where the borrower provides an asset—such as property, securities, or other valuables—as security for the loan. If the borrower fails to repay, the lender has the right to seize and sell the collateral to recover the owed amount. This setup reduces the lender's risk and often allows the borrower to access funds at better terms. It is commonly used in various financial markets, including secured loans, repurchase agreements, and derivatives, ensuring both parties' interests are protected through the pledged assets.