Please ensure Javascript is enabled for purposes of website accessibility
Search
Accessibility Menu

What Is Collateral?

By Kristi Waterworth – Updated Feb 26, 2025 at 3:18PM

Key Points

  • Secured loans offer lower interest rates and longer repayment terms by using valuable assets as collateral.
  • Common collateral types include real estate for mortgages and automobiles for car loans.
  • Collateral reduces lending risk, enabling loans for larger amounts or to borrowers with lower credit scores.
Key findings are powered by ChatGPT and based solely off the content from this article. Findings are reviewed by our editorial team. The author and editors take ultimate responsibility for the content.

Our Guides

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.