collateral

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

Updated on: 16 Apr 2018

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

The brothers’ holding fell as lenders claimed shares put up by the founding family as collateral after a decision by India’s top court.

— george smith alexander, Bloomberg.com, "TPG-Backed Firm Sweetens Bid for India's No. 2 Hospital Chain," 10 Apr. 2018
While waterproof mascara has longer staying power than its traditional counterparts, many of those formulas require a full-force scrub-fest to remove (and claim a few lashes as collateral).

— sophie wirt, Allure, "The 9 Best Tubing Mascaras for Long, Smudgeproof Lashes," 4 Apr. 2018
The New York Fed’s new rate is based on the rates in the active market for a kind of short term-loan known as a repurchase agreement, or repo, which uses Treasury securities as collateral.

— the new york times, New York Times, "White House to List Chinese Products Facing Tariffs and the March Jobs Report," 1 Apr. 2018
Many of those who have served on the board of directors over the years have been descendants of the original landowners who put up their Phoenix-area property as collateral to build the Roosevelt Dam in the early 1900s.

— ryan randazzo, azcentral, "A new political group is spending at least $100K on SRP's board races," 30 Mar. 2018
Besides a partial tear of the ulnar collateral ligament in his elbow, Eovaldi completely tore his flexor tendon toward the end of his final season with the New York Yankees in 2016, further complicating his recovery.

— jorge l. ortiz, USA TODAY, "Tampa Bay Rays hope modest investment in Nathan Eovaldi pays big," 28 Mar. 2018
Marriotts Ridge will be without its left-handed ace, senior Dylan Anagnos, who suffered a torn ulnar collateral ligament (UCL) in his elbow and will undergo Tommy John surgery later this spring.

— kyle stackpole, Howard County Times, "County balance should make for unpredictable 2018 baseball season," 26 Mar. 2018
But they can be bought—and used as collateral to borrow—by banks and investors outside the U.S. who don’t have access to the Fed, which created extra demand and pushed their yield increasingly below the interest rate on money.

— jon sindreu, WSJ, "Market Panic Measure Hits Eurozone Crisis Heights—But Alarms Aren’t Ringing," 19 Mar. 2018
After making only five appearances, he was shut down and later diagnosed with a torn ulnar collateral ligament in his pitching elbow.

— todd rosiak, Milwaukee Journal Sentinel, "Brewers pitching prospect Nathan Kirby is finally healthy and ready to establish himself," 15 Mar. 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

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
As part of the bankruptcy, Ms. Tilton is seeking to oust the restructuring firm from its role as collateral manager of the funds.

— andrew scurria and patrick fitzgerald, WSJ, "Lynn Tilton Puts Zohar Investment Vehicles Into Bankruptcy," 12 Mar. 2018
Former Athletics starter Jesse Hahn is not eligible to return from the 60-day disabled list, on which he was placed March 6 because of a right ulnar collateral ligament sprain, until sometime in May at the earliest.

— maria torres, kansascity, "What we learned at Royals spring training ... | The Kansas City Star," 25 Mar. 2018
Traditional approaches to eradicating invasive species, such as toxins, can have harmful collateral effects to native wildlife.

— nishan degnarain, Fortune, "Commentary: These Technologies Could Save the Northern White Rhino From Extinction," 20 Mar. 2018
Whatever collateral vigilante action occurs along the way is strictly coincidental.

— willie brown, San Francisco Chronicle, "North Korea is suddenly Donald Trump’s best friend," 10 Mar. 2018
The collateral effects can be devastating and include losing jobs, housing, even the custody of children.

— alan feuer, New York Times, "Judge Says New York’s Bail Law Treats Poor Unfairly," 11 Feb. 2018
But in baseball, pitchers have been said to have flexor tendonitis only to later require ulnar collateral ligament reconstruction surgery.

— profootballdoc, sandiegouniontribune.com, "Foles' passes might have been blown askew by more than wind," 21 Jan. 2018
The story’s collateral impact was felt across several newsrooms, some of which took action.

— james rainey, NBC News, "Journalists struggle to explain why they bought fake twitter followers," 3 Feb. 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