collateral

noun col·lat·er·al \ kə-ˈla-t(ə-)rəl \

|Updated on: 10 Jun 2018

Examples: collateral in a Sentence

Editor's Note: Did You Know?

Definition of collateral

plural collaterals

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

See collateral defined for English-language learners

Recent Examples of collateral from the Web

Reasons for that could include lack of credit history, low income and lack of collateral.

— marc lester, Anchorage Daily News, "New Anchorage entrepreneurs get help turning ideas – and neighborhood pride – into a business plan," 4 June 2018
Chow, whose wife has been battling Stage 4 colon cancer, took out a $700,000 mortgage with Melrose Credit Union in 2011 and initially listed only the medallion as his collateral, according to documents viewed by the New York Post.

— christopher carbone, Fox News, "String of New York taxi driver suicides raise concerns as Uber, Lyft proliferate," 29 May 2018
DePasquale said there were no records of the charter schools’ boards having authorized the pledging of the collateral.

— maddie hanna, Philly.com, "Auditor general blasts Aspira and Pa. charter-school law," 23 May 2018
However, the 5th U.S. Circuit Court of Appeals ruled earlier this year that Isgur ruled incorrectly in determining the value of Comcast’s collateral securing the loan and sent the case back to Isgur for reconsideration.

— david barron, Houston Chronicle, "Court to hear more arguments in Comcast SportsNet bankruptcy case," 22 May 2018
Cohen has also both made and received large loans on the basis of questionable collateral.

— david z. morris, Fortune, "The Many Hustles of Michael Cohen," 6 May 2018
Then the ulnar collateral ligament snapped in the bullpen before his fourth start in the Padres organization.

— jeff sanders, sandiegouniontribune.com, "Padres prospect Chris Paddack 'better now' as he restarts career in Lake Elsinore," 23 May 2018
Johnson had surgery to repair the ulnar collateral ligament in his left thumb on April 30.

— jordan mcpherson, miamiherald, "This Heat player doesn't believe extra pressure will come with his 'nicer paycheck' | Miami Herald," 16 May 2018
Senseman has publicly defended the charter chain's decision to use its schools as collateral for expanding out of state.

— craig harris, azcentral, "State Charter Board OKs Basis expansion despite concerns about finances, teacher pay," 14 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.

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.

Origin and Etymology of collateral

see ²collateral

NEW! Time Traveler

First Known Use: 1691

in the meaning defined at sense 2

See Words from the same year

Other Anthropology Terms

ectomorph, ethnography, prehistory, yurt

collateral

adjective

Definition of collateral

1 a : 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 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

4 a : 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

—

collaterality

play \kə-ˌla-tə-ˈra-lə-tē\ noun

—

collaterally

play \kə-ˈla-t(ə-)rə-lē\ adverb

See collateral defined for English-language learners

See collateral defined for kids

Examples of collateral in a Sentence

the collateral effects of the government's policies

Recent Examples of collateral from the Web

According to the agency, only half of those arrested had a criminal record; the rest appeared to be collateral arrests.

— jacqueline serrato, chicagotribune.com, "This man had a visa but was picked up by ICE one day after entering the U.S.," 1 June 2018
Scarlet Kim, legal officer at Privacy International, said that the hearing at the Supreme Court could have a significant collateral impact on the right to privacy.

— aine quinn, Bloomberg.com, "U.K. Supreme Court Considers Government Spying for First Time," 16 May 2018
In 1995 she was selected as designer for the Derby Festival’s Pegasus Pin and also designed nine other Festival Event Pins, as well as other collateral material.

— for kdf, The Courier-Journal, "Kentucky Derby Festival Poster Series," 6 Feb. 2018
That helps limit fraud, but also creates collateral headaches.

— brian barrett, WIRED, "MoviePass Revives Its Unlimited Plan," 2 May 2018
But instead, the car was collateral for a bail bond for her child’s father.

— jessica silver-greenberg and shaila dewan, New York Times, "When Bail Feels Less Like Freedom, More Like Extortion," 31 Mar. 2018
Putting cash and derivatives trading under the same roof at CME would save major banks millions of dollars a year by enabling them to set aside less collateral.

— will hadfield and viren vaghela, chicagotribune.com, "CME Group takes over Britain's Nex for $5.4B, creating trading venue behemoth," 29 Mar. 2018
Putting cash and derivatives trading under the same roof at CME would save major banks millions of dollars a year by enabling them to set aside less collateral.

— will hadfield, Bloomberg.com, "CME to Buy Spencer’s NEX to Create Trading Venue Behemoth," 29 Mar. 2018
But instead, the car was collateral for a bail bond for her child's father.

— Anchorage Daily News, "When freedom feels like extortion: Bail bondsmen accused of exploiting poor clients," 31 Mar. 2018

Origin and Etymology of collateral

Middle English, from Anglo-French, from Medieval Latin collateralis, from Latin com- + lateralis lateral

NEW! Time Traveler

First Known Use: 14th century

in the meaning defined at sense 1a

See Words from the same year

Other Business Terms

amortize, caveat emptor, clearinghouse, divest, due diligence, emolument, green-collar, marque, overhead, perquisite

Financial Definition of COLLATERAL

collateral

noun

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 Defined for English Language Learners

collateral

adjective

Definition of collateral for English Language Learners

: related but not in a direct or close way

collateral

noun

Definition of collateral for English Language Learners

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

Medical Dictionary

collateral

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

medical Definition of collateral

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

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

Law Dictionary

collateral

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

legal Definition of collateral

1 a : 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

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

b : secured by collateral

a collateral loan

—

collaterally

adjective

collateral

noun

legal Definition of collateral

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