Collateral is cash (for example, a certificate of deposit or bank account balance) or property (for example, a car or a home) that is used to secure a loan. When borrowers use collateral in conjunction with a loan, they are said to save a "secured loan," and their lender has a "security interest" in their pledged asset(s). If the borrower misses a loan payment, the lender can seize the borrower's cash or property to take the money that is owed. Unsecured debts (for example, credit card bills), on the other hand, do not have any collateral.
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