Collateralized Lending

Collateralized lending is a financial arrangement where a borrower provides an asset—such as property, stocks, or other valuables—as security for a loan. If the borrower fails to repay, the lender has the legal right to seize and sell the collateral to recover the owed money. This reduces the lender's risk and often results in lower interest rates for the borrower. Common examples include a mortgage, where your home serves as collateral, or a secured personal loan. Collateralized lending helps both parties by making borrowing safer and more accessible.