collateral

Vocabulary Word

Definition

'Collateral' is something of value you promise to give to someone, usually a bank or lender, if you're not able to pay back a loan. It’s kind of an assurance that the lender won't lose all their money if you can't pay.

Examples in Different Contexts

In fintech platforms offering loans, assessing the value of 'collateral' is vital. A fintech product manager might state, 'Our platform uses advanced algorithms to appraise collateral and determine loan eligibility swiftly.'

Practice Scenarios

Tech

Scenario:

Our start-up has developed a unique technology with pending patents. Could these be used as security against a venture capital investment?

Response:

Let's put forth our intellectual property as collateral, upon patent approval, to show the investors our commitment.

Business

Scenario:

We're looking to secure a loan for business expansion, and we have several paid-off assets. What can we offer as collateral?

Response:

The equipment and real estate properties could be used as collateral for the loan, offering a strong level of security.