collateral
noun
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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
adjectiveDefinition 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
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noun
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adverb
Examples of collateral in a Sentence
Adjective
the collateral effects of the government's policiesRecent Examples on the Web: Noun
In return for the investment, Evergrande wound up with a 45 percent stake in the company, and Faraday Future also pledged its intellectual property and most of its hard assets as collateral. — Sean O'kane, The Verge, "Faraday Future dealt potentially crippling blow while almost out of cash," 30 Nov. 2018 In some countries, for instance, the law gives control of household assets to the man, and this very much restricts the ability of women to use the property as collateral to access the financial system. — Sean Illing, Vox, "Want less poverty in the world? Empower women.," 5 Nov. 2018 Morgan saw clients bring more assets under management during the quarter, and the bank grew interest income, helped by a recent push by Morgan Stanley to do lending to asset management clients using their wealth as collateral. — Ken Sweet, The Seattle Times, "Goldman Sachs, Morgan Stanley both report strong 3Q profits," 16 Oct. 2018 When the dollar strengthens, that collateral falls in value compared with the loan, so the loan becomes riskier. — Paul J. Davies, WSJ, "Why the Strong Dollar Is Bad for Banks," 10 July 2018 The collateral, comprising about 1,700 properties, is mainly in big cities. — The Economist, "A critical task for the Greek economy enters a new phase," 29 May 2018 That collateral includes the Kansas property as well as properties in New Braunfels and South Padre Island in Texas. — Fox News, "Murder charges could hinder water park's debt repayment," 11 Apr. 2018 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 2018Recent Examples on the Web: Adjective
Since late last year, cryptocurrency prices have plummeted, lowering the value of the collateral Salt lent money against. — Shane Shifflett, WSJ, "Firm Tied to Cryptocurrency Entrepreneur Faces SEC Investigation," 15 Nov. 2018 Safety Net Deploys Bailouts, collateral, cash on hand — Fred Trump was prepared and was not about to let bad bets sink his son. — Susanne Craig, The Seattle Times, "Trump engaged in suspect tax schemes as he reaped riches from father," 2 Oct. 2018 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. 2018These 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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More Definitions for collateral
collateral
nounFinancial 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
nounEnglish 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
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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
nounMedical 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
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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
nounLegal 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
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