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



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


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


the collateral effects of the government's policies

Recent Examples on the Web: Noun

This was true collateral, the most direct way to show your trust. Vanessa Grigoriadis, New York Times, "The ‘Sex Cult’ That Preached Empowerment," 30 May 2018 The only collateral off the table, in fact, is the first-round pick in 2019. Jourdan Rodrigue, charlotteobserver, "Panthers open to trading down in NFL draft. Should they? And what could they get? | Charlotte Observer," 24 Apr. 2018 In 2016, then-Steinhoff Chairman Christo Wiese borrowed about 1.25 billion euros ($1.5 billion) from a group of lenders, pledging stock in the company as collateral, filings show. Donal Griffin,, "An Opaque $3.5 Billion Business Gives Wall Street a Hangover," 28 Mar. 2018 Using the real estate Manafort had acquired with their Ukrainian fees as collateral, he — allegedly with Gates’s assistance — took out millions of dollars in mortgages. Marc Fisher, Washington Post, "Inside the Manafort money machine: A decade of influence-peddling, lavish spending and alleged fraud," 23 Feb. 2018 On the other hand, SBBS could actually make sovereign-bond markets more liquid by providing alternative means of collateral, hedging and arbitrage. The Economist, "A safe asset is devised for the euro zone," 1 Feb. 2018 But for aspiring skippers who don't have the credit, collateral, or cosigner to secure a permit loan, regional fisheries trusts can fill a critical gap. Ann Robertson | Opinion, Anchorage Daily News, "Graying of the fleet has Alaska looking for young hands on deck," 13 Jan. 2018 Los Angeles Angels pitcher Garrett Richards has elected to undergo Tommy John surgery for his damaged ulnar collateral ligament in his right elbow and will miss the remainder of the season . . ., "US Olympic Committee tabs Sarah Hirshland as its CEO," 13 July 2018 Angels pitcher Garrett Richards had an MRI of his right elbow Wednesday which revelaed damage to his ulnar collateral ligament, the team announced. Charlotte Carroll,, "Angels' Garrett Richards Has Damage to His UCL, May Need Surgery," 11 July 2018

Recent Examples on the Web: Adjective

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,, "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,, "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,, "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. 2018 Most notably, the loan is unsecured, meaning the lender didn’t require collateral. Hannah Levitt,, "Personal loans surge to a record high," 3 July 2018 Biologists said a run of 81,800 upriver fish will more than justify the catch and collateral mortalities of 4,332 protected upriver salmon during the April/May sportfishing seasons below and above Bonneville. Bill Monroe,, "Spring chinook fishing to reopen on Columbia River," 23 May 2018 According to the agency, only half of those arrested had a criminal record; the rest appeared to be collateral arrests. Jacqueline Serrato,, "This man had a visa but was picked up by ICE one day after entering the U.S.," 1 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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First Known Use of collateral


1691, in the meaning defined at sense 2


14th century, in the meaning defined at sense 1a

History and Etymology for collateral


see collateral entry 2


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

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Last Updated

1 Sep 2018

Look-up Popularity

Time Traveler for collateral

The first known use of collateral was in the 14th century

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More Definitions for collateral



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



English Language Learners Definition of collateral

 (Entry 1 of 2)

: related but not in a direct or close way



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

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


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



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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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

Other words from collateral

collaterally adjective



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

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More from Merriam-Webster on collateral

Spanish Central: Translation of collateral

Nglish: Translation of collateral for Spanish Speakers

Britannica English: Translation of collateral for Arabic Speakers Encyclopedia article about collateral

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