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Why do lenders able for collateral while lending? |
| Answer» Lenders ask for collateral as security against loans. If the borrower fails to repay the loan, the lender has the right to sell the asset-or collateral to recover the payment. Collateral assets (such as land, vehicle, etc.) act as a security for the lenders in case the borrower defaults on repayment of loan. It is for this reason that lenders ask for collateral while lending. | |