Additional Collateral

Additional Collateral
Additional assets put up as collateral by a borrower against debt obligations. Additional collateral is used to lessen the risk to the lender. Creditors might require extra collateral in order for a given loan to remain at a constant interest level, or to appease investors or a credit committee. Such collateral might include cash, certificates of deposit, equipment, stock or letters of credit.

Collateral is commonly used when securing loans as a way to increase the likelihood of repayment. If the borrower defaults on a loan, the lender would have the right to acquire the collateral in an attempt to pay off the remaining debt. If additional funds are lent, then more collateral might also be required.

For example, if a lender requires that a $2,000 asset be pledged as collateral for a $10,000 loan, the $2,000 asset is considered collateral. If at some point additional funds are required or the lender feels that the borrower has become too risky, then additional collateral might be needed (if the contract allows it).


Investment dictionary. . 2012.

Игры ⚽ Поможем написать курсовую

Look at other dictionaries:

  • collateral — col·lat·er·al 1 /kə la tə rəl, la trəl/ adj 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 …   Law dictionary

  • Collateral ligaments of metacarpophalangeal articulations — Metacarpophalangeal articulation and articulations of digit. Ulnar aspect. Latin ligamenta collateralia articulationum metacarpophalangealium Gray s …   Wikipedia

  • Collateral management — Collateral has been used for hundreds of years to provide security against the possibility of payment default by the opposing party in a trade. Collateral management began in the 1980s, with Bankers Trust and Salomon Brothers taking collateral… …   Wikipedia

  • additional — I adjective accessory, added, additive, additus, adiectus, another, appended, auxiliary, collateral, extra, further, included, joined, more, other, superadded, supervenient, supplemental, supplementary, ulterior associated concepts: additional… …   Law dictionary

  • Collateral — Col*lat er*al, a. [LL. collateralis; col + lateralis lateral. See {Lateral}.] 1. Coming from, being on, or directed toward, the side; as, collateral pressure. Collateral light. Shak. [1913 Webster] 2. Acting in an indirect way. [1913 Webster] If… …   The Collaborative International Dictionary of English

  • Collateral assurance — Collateral Col*lat er*al, a. [LL. collateralis; col + lateralis lateral. See {Lateral}.] 1. Coming from, being on, or directed toward, the side; as, collateral pressure. Collateral light. Shak. [1913 Webster] 2. Acting in an indirect way. [1913… …   The Collaborative International Dictionary of English

  • Collateral circulation — Collateral Col*lat er*al, a. [LL. collateralis; col + lateralis lateral. See {Lateral}.] 1. Coming from, being on, or directed toward, the side; as, collateral pressure. Collateral light. Shak. [1913 Webster] 2. Acting in an indirect way. [1913… …   The Collaborative International Dictionary of English

  • collateral damage — Collateral Col*lat er*al, a. [LL. collateralis; col + lateralis lateral. See {Lateral}.] 1. Coming from, being on, or directed toward, the side; as, collateral pressure. Collateral light. Shak. [1913 Webster] 2. Acting in an indirect way. [1913… …   The Collaborative International Dictionary of English

  • Collateral issue — Collateral Col*lat er*al, a. [LL. collateralis; col + lateralis lateral. See {Lateral}.] 1. Coming from, being on, or directed toward, the side; as, collateral pressure. Collateral light. Shak. [1913 Webster] 2. Acting in an indirect way. [1913… …   The Collaborative International Dictionary of English

  • Collateral security — Collateral Col*lat er*al, a. [LL. collateralis; col + lateralis lateral. See {Lateral}.] 1. Coming from, being on, or directed toward, the side; as, collateral pressure. Collateral light. Shak. [1913 Webster] 2. Acting in an indirect way. [1913… …   The Collaborative International Dictionary of English

Share the article and excerpts

Direct link
… Do a right-click on the link above
and select “Copy Link”