collateral

noun

col·lat·er·al | \kə-ˈla-t(ə-)rəl

plural collaterals

Definition of collateral

(Entry 1 of 2)

1 : property (such as securities) pledged by a borrower to protect the interests of the lender

2 : a collateral relative A collateral inherited the estate.

3 : a branch of a bodily part (such as a vein)

4 : informational materials (such as brochures and fact sheets) used in selling a product or service to a prospective customer or buyer Attendees can expect to make approximately 50 new business contacts and should … have an ample supply of business cards, marketing collateral and anything else to help potential leads remember them.— Nancy Hollingshead and Laurie Winslow

collateral

adjective

Definition of collateral (Entry 2 of 2)

1a : accompanying as secondary or subordinate : concomitant digress into collateral matters

b : indirect no direct objection, but a few collateral ones

c : serving to support or reinforce : ancillary collateral evidence was presented at the trial

2 : belonging to the same ancestral stock but not in a direct line of descent — compare lineal sense 3a Brothers, cousins, uncles, and nephews are collateral kinsmen.

3 : parallel, coordinate, or corresponding in position, order, time, or significance collateral states like Athens and Sparta

4a : of, relating to, or being collateral used as security (as for payment of a debt or performance of a contract)

b : secured by collateral a collateral loan secured by stocks and bonds deposited with the lender

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Other Words from collateral

Adjective

collaterality \kə-ˌla-tə-ˈra-lə-tē

\ noun

collaterally \kə-ˈla-t(ə-)rə-lē

\ adverb

Did You Know?

If an official talking about some policy refers to a collateral issue, he or she means something that may be affected but isn't central to the discussion. To an anthropologist, your cousin would be called a collateral relative, since he or she (unlike your grandmother, brother, or daughter) is "off to the side" of your direct line of descent. As a noun, collateral means something provided to a lender as a guarantee of repayment. So if you take out a loan or mortgage to buy a car or house, the loan agreement usually states that the car or house is collateral that goes to the lender if the sum isn't paid.

Examples of collateral in a Sentence

Adjective

the collateral effects of the government's policies

Recent Examples on the Web: Noun

The houses that Invitation borrowed $1.3 billion against were valued at 26% more than when they were used as collateral in earlier bond deals, according to Kroll Bond Rating Agency. — Laura Kusisto, WSJ, "House Money: Wall Street Is Raising More Cash Than Ever for Its Rental-Home Gambit," 9 July 2018 This would run counter to efforts to increase the use of out-of-court settlement for collateral across the EU. — The Economist, "Bad loans remain a concern in Italy and across southern Europe," 26 May 2018 The money had been paid upfront and without collateral. — Joe Pappalardo, Popular Mechanics, "Will Uncle Sam Shower Some Love on Spaceports?," 7 May 2018 The women, who were allegedly forced to give up collateral in the form of nude photographs and family secrets to join the group, were branded by a cauterizing pen with a logo containing Raniere's initials, according to prosecutors. — Jon Campbell, USA TODAY, "Allison Mack of 'Smallville' gets $5M bail, home confinement in sex-cult case," 24 Apr. 2018 But domestic factories could end up as collateral in this brewing trade war with China. — Jon Chesto, BostonGlobe.com, "Trump tariffs could hurt Mass. manufacturers," 4 Apr. 2018 The opposition party charges that members of Yameen's family control the Maldivian tankers in question and that a tanker was used as collateral in an application for a $4 million mortgage with the Bank of Maldives. — chicagotribune.com, "Is Abdulla Yameen handing over the Maldives to China?," 22 Mar. 2018 There is a huge disconnect from the human collateral in this overly hostile and aggressive political climate. — David Miliband, Town & Country, "Cate Blanchett Sounds an Alarm About the Global Refugee Crisis," 8 May 2017 This was true collateral, the most direct way to show your trust. — Vanessa Grigoriadis, New York Times, "The ‘Sex Cult’ That Preached Empowerment," 30 May 2018

Recent Examples on the Web: Adjective

The number could tick up if officers come across other undocumented immigrants in the course of their actions and make what are known as collateral arrests. — James Hohmann, Washington Post, "The Daily 202: Unexpected defeat in rural Wisconsin special election sets off alarm bells for Republicans," 17 Jan. 2018 Her little brother is dragged along to become a reluctant wolf pup: collateral camp damage. — Nalini Jones, New York Times, "When the Going Gets Tough, These Kids Find Their Way," 13 Apr. 2018 Shohei Ohtani swung a bat back in Southern California for the first time since sustaining a Grade 2 sprain of his right ulnar collateral ligament on June 6. — Jeff Miller, latimes.com, "Shohei Ohtani has been cleared to resume hitting, Mike Trout could return to center field Friday," 29 June 2018 The surgery pioneered by Dr. Frank Jobe involves replacing a torn or ruptured ligament in the elbow known as the ulnar collateral ligament with a tendon from another part of the body. — Craig Davis, Sun-Sentinel.com, "Teen Tommy John surgeries, youth sports injuries reach epidemic proportions," 28 June 2018 From Los Angeles: Shohei Ohtani heads to disabled list with sprained ulnar collateral ligament. — Tribune News Service, OregonLive.com, "MLB trade rumors: Will the Seattle Mariners try to acquire Cole Hamels?," 11 June 2018 Applying for a collateral loan Some banks offer personal loans that use something other than a home as collateral. — Josh Smith, USA TODAY, "Health care costs: 10 credit options to help manage the expenses involved," 16 Apr. 2018 Most notably, the loan is unsecured, meaning the lender didn’t require collateral. — Hannah Levitt, latimes.com, "Personal loans surge to a record high," 3 July 2018 Biologists said a run of 81,800 upriver fish will more than justify the catch and collateral mortalities of 4,332 protected upriver salmon during the April/May sportfishing seasons below and above Bonneville. — Bill Monroe, OregonLive.com, "Spring chinook fishing to reopen on Columbia River," 23 May 2018

These example sentences are selected automatically from various online news sources to reflect current usage of the word 'collateral.' Views expressed in the examples do not represent the opinion of Merriam-Webster or its editors. Send us feedback.

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Last Updated

29 Sep 2018

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The first known use of collateral was in the 14th century

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More Definitions for collateral

collateral

noun

Financial Definition of collateral

What It Is

Collateral is an asset pledged by a borrower to a lender, usually in return for a loan. The lender has the right to seize the collateral if the borrower defaults on the obligation.

How It Works

Let's assume you would like to borrow $100,000 to start a business. Even if you have an excellent credit rating, a bank may be reluctant to lend you the money because it may be left with nothing if you default on the loan. Thus, the bank may require $100,000 of collateral in order to lend you the money. This collateral might consist of financial instruments, houses, cash, or even objects such as art, jewelry, or other items. You might also pledge your business receivables as well.

If you do in fact default on the loan, the loan agreement gives the lender the right to seize and then sell the collateral in order to recover any outstanding balance.

Why It Matters

Collateral is security, which is why collateralized loans often receive better interest rates than unsecured loans, since the lender bears less risk.

Although mortgages are one of the most common collateralized obligations (with the house being the collateral), many other kinds of lending circumstances require collateral. For instance, margin loans almost always require collateral. Frequently the collateral is the securities involved in the margin loan.

However, the type and amount of collateral required for a given loan is often a matter of negotiation between the lender and borrower. For instance, a lender might require a borrower to pledge any assets purchased during the loan period as additional collateral. In some cases, collateral for one obligation can also be collateral for other obligations (this is called cross-collateralization). This often occurs in real estate transactions, where a house collateralizes more than one mortgage.

Source: Investing Answers

collateral

adjective

English Language Learners Definition of collateral

(Entry 1 of 2)

: related but not in a direct or close way

collateral

noun

English Language Learners Definition of collateral (Entry 2 of 2)

: something that you promise to give someone if you cannot pay back a loan

See the full definition for collateral in the English Language Learners Dictionary

collateral

adjective

col·lat·er·al | \kə-ˈlat-ə-rəl, -ˈla-trəl

Medical Definition of collateral

(Entry 1 of 2)

1 : relating to or being branches of a bodily part collateral sprouting of nerves

2 : relating to or being part of the collateral circulation collateral circulatory vessels collateral blood flow

collateral

noun

Medical Definition of collateral (Entry 2 of 2)

1 : a branch especially of a blood vessel, nerve, or the axon of a nerve cell excitation of axon collaterals

2 : a bodily part (as a ligament) that is lateral in position

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collateral

adjective

col·lat·er·al | \kə-ˈla-tə-rəl, -ˈla-trəl

Legal Definition of collateral

(Entry 1 of 2)

1a : accompanying as a secondary fact, activity, or agency but subordinate to a main consideration

b : not directly relevant or material a collateral evidentiary matter a collateral issue

2 : belonging to the same ancestral stock but not in a direct line of descent — compare lineal

3a : of, relating to, or being collateral used as a security (as for payment of a debt)

b : secured by collateral a collateral loan

collateral

noun

Legal Definition of collateral (Entry 2 of 2)

1 : a collateral relative

2 : property pledged by a borrower to protect the interests of the lender in the event of the borrower's default specifically, under Article 9 of the Uniform Commercial Code : property subject to a security interest