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

Many borrowers lack land titles to use as collateral. — The Economist, "Housing microfinance can help poor people build better homes," 19 July 2019 The attorneys wrote that Epstein was willing to put up his Manhattan mansion and private jet as collateral and agree to home confinement and GPS monitoring, and even hire round-the-clock security to watch him. — Matt Zapotosky, sun-sentinel.com, "Aim of 2008 deal was to jail Epstein, Acosta says, but court documents tell more of the Florida story," 12 July 2019 Repo defaults that result in forced asset sales can also push down prices of corporate bonds and other debt securities that were pledged as collateral for the loans. — Shen Hong, WSJ, "China’s Money-Markets Strains Ease, but System Is Still Vulnerable to Shocks," 24 June 2019 Senegal won their tournament opener 2-0 against Tanzania without captain Mane - who was suspended - and his Champions League medal may not need to be put up as collateral if Aliou Cisse's side maintain their form. — SI.com, "Sadio Mane Claims He Would Trade Champions League Medal for Africa Cup of Nations Triumph," 24 June 2019 On the inner part of the knee is the medial collateral ligament, with the lateral collateral ligament on the outer part. — Colin Hoobler, oregonlive.com, "Klay Thompson’s torn ACL: How rehabilitation and return might go for the Golden State Warriors guard," 17 June 2019 Pattis said his client posted bail using his retirement fund as collateral. — Fox News, "Missing Connecticut mother’s estranged husband posts bail," 12 June 2019 The linebacker tore the anterior cruciate and lateral collateral ligaments in his left knee. — Mark Inabinett | Minabinett@al.com, al.com, "Shaun Dion Hamilton ‘looks fast, instinctive’ at Redskins’ minicamp," 6 June 2019 The supply of securities that are used for collateral in the repo market has grown as the Treasury has increased its sales of short-term debt to help fund rising budget deficits. — Daniel Kruger And Telis Demos, WSJ, "The Benchmark Set to Replace Libor Suffers Volatility Spike," 11 Feb. 2019

Recent Examples on the Web: Adjective

In return, a portion of her DoorDash shares become collateral with the third party custodian. — Lucinda Shen, Fortune, "Wealth Advisory Platform SecFi Closes $6 Million Funding Round," 19 July 2019 The win-at-all costs, collateral-damage-be-damned mentality of Selina this year was both delicious and disturbing to watch. — Dan Snierson, EW.com, "Julia Louis-Dreyfus calls Emmy nods for final Veep season ‘supremely satisfying’," 16 July 2019 Immigration activists decry such collateral arrests, which were sharply curtailed during President Barack Obama’s second term. — Washington Post, "Making an immigration arrest requires hours of surveillance," 15 July 2019 Such collateral arrests have sparked concern from immigration advocates who argue that the government shouldn’t be expending limited resources arresting people whose only offense is being in the U.S. without permission. — Alex Leary, WSJ, "U.S. Cities Prepare for Federal Immigration Raids," 22 June 2019 The collateral funds were meant to ensure that the former UConn campus, which is contaminated with toxic PCBs, receives proper remediation. — Emily Brindley, courant.com, "Work to restart next month at Ideanomics on former UConn campus in West Hartford," 28 June 2019 Of course, there’s always going to be some collateral effects, unintended consequences. — Joshua Fechter, ExpressNews.com, "Property values near the Pearl have exploded in the past five years," 22 June 2019 Meantime, the collateral effects of Lasix are disputed even among horse owners, trainers and jockeys. — Dennis Wagner, azcentral, "Sen. Martha McSally bill aimed at race horse deaths prompts debate over race horse 'doping'," 15 June 2019 Maybe this is stark commentary on collateral international damage caused by the American military-industrial complex and a way to ground the story of a woman hell-bent on revenge against the West? — Sam Machkovech, Ars Technica, "Call of Duty: Modern Warfare," 30 May 2019

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

21 Jul 2019

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Time Traveler for collateral

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

noun

English Language Learners Definition of collateral

(Entry 1 of 2)

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

collateral

adjective

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

formal : related but not in a direct or close way

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