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Question
______ is an asset that the borrower owns and uses as a guarantee until the loan is repaid to the lender.
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Solution
Collateral is an asset that the borrower owns and uses as a guarantee until the loan is repaid to the lender.
Explanation:
This asset, which might include property, vehicles, or gold, acts as financial security for the lender, reducing risk. If the borrower fails to make loan payments, the lender has the legal authority to seize and sell the asset to recoup the unpaid sum.
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