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

Shares can be pledged, like other assets, as collateral for a loan. — Mike Bird, WSJ, "A Major Market’s Major Headache: Stocks That Crash Without Warning," 21 Jan. 2019 Moody’s also noted that the downgrades would require PG&E to post an additional $800 million in collateral, possibly leading to further deterioration in its financial position. — Russell Gold, WSJ, "PG&E Prepares for Bankruptcy Amid Wildfire Fallout," 14 Jan. 2019 With this change, attempting to identify defunct ASes and block all their IPs would result in collateral blocking. — Dan Goodin, Ars Technica, "How 3ve’s BGP hijackers eluded the Internet—and made $29M," 21 Dec. 2018 Schlitterbahn's other water parks in Texas are EPR Properties' collateral for the KCK mortgage loan. — Steve Vockrodt, kansascity, "A month after Schlitterbahn's opening, four rides remain closed at the KCK water park," 10 July 2018 According to the study, athletes ages 15 to 19 accounted for 56.8 percent of ulnar collateral ligament reconstruction procedures — Tommy John surgery, as it is popularly known — from the start of 2011 through 2015. — Sam Donnellon, Philly.com, "Elbow injuries - and surgery - affect high school pitchers more than anyone else," 9 July 2018 Leave aside the argument that AI could help reduce collateral human damage in warfare, provide more humane policing of the border, and possibly even improve the government’s ability to reunite children with their parents. — Alan Murray, Fortune, "China Mobile, Glencore Woes, HTC Cuts: CEO Daily for July 3, 2018," 3 July 2018 But his attorney, Deputy Public Defender Kevin Brady, argued that the sentencing could not go forward under a legal principle called collateral estoppel, which is akin to double jeopardy. — Michael Kiefer, azcentral, "Serial rapist to be sentenced after authorities solve name mystery," 2 July 2018 The authority has several loan programs and also invests in energy projects but it is typically required to — unless directed via legislative policy — to achieve commercial returns on its investments, which also often require significant collateral. — Author: Elwood Brehmer, Anchorage Daily News, "Gas line corporation seeks loan from Alaska development bank," 7 June 2018

Recent Examples on the Web: Adjective

That may well include calling Mr. Putin’s bluff on collateral Russian casualties. — The Editorial Board, WSJ, "High Stakes in Syria," 12 Apr. 2018 Recent studies suggest that cells CRISPRed to treat disease might increase cancer risk, and that using the technology could cause significant collateral DNA damage; those won’t be the only studies to fuel fears. — Tamar Haspel, Vox, "The public doesn’t trust GMOs. Will it trust CRISPR?," 24 July 2018 If the value of that collateral declines, a shareholder might face a margin call, requiring them to stump up fresh cash. — Mike Bird, WSJ, "A Major Market’s Major Headache: Stocks That Crash Without Warning," 21 Jan. 2019 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

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

26 Apr 2019

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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

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