collateralize

Vocabulary Word

Definition

'Collateralize' is a term mainly used in finance. It's when someone uses something they own, like a car or a house, as collateral for a loan. If they can't pay back the loan, the lender takes the collateral.

Examples in Different Contexts

In social finance, 'collateralized' lending models can enable access to capital for underserved communities. A social finance strategist might declare, 'Collateralized loan programs can empower marginalized groups, allowing them to leverage their assets to access essential financial services.'

Practice Scenarios

Banking

Scenario:

Given current economic conditions, we must be particularly cautious about lending practices and risk management.

Response:

In that case, do we ask our borrowers to collateralize their loans with real estate or other high-value assets?

Real Estate

Scenario:

Are you open to leveraging your property as a means to secure financing for the planned renovations?

Response:

That's a viable option. We could indeed collateralize this property to secure the necessary renovation funds.