Q7 of 26 Page 1

Why do bank or lenders demand collateral against loans?

Collateral refers to any property or asset that is provided by a borrower to the lender for securing the loan. If the borrower fails to repay the loan on the due date, the lender has the right to seek his collateral to attain the required money.The banks or lenders demand collateral against the loans to keep as security.


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