The asset or assets that a borrower pledges in order to guarantee repa

by

The asset or assets that a borrower pledges in order to guarantee repayment of a loan is called as

Cheque
Collateral
Guarantee card
Bond
This question was previously asked in
UPSC CDS-1 – 2021
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Collateral is an asset or piece of property that a borrower pledges to a lender as security for a loan. If the borrower defaults on the loan, the lender has the right to seize and sell the collateral to recover the outstanding debt.
– Collateral reduces the risk for the lender, making them more willing to extend credit.
– Common examples of collateral include real estate (for mortgages), vehicles (for car loans), or other valuable assets.
A cheque is a payment instrument. A guarantee card is not a standard financial term for pledged assets. A bond is a debt instrument representing money lent by an investor to a borrower (typically a government or corporation), not an asset pledged *by* a borrower *to* guarantee repayment.

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