Plain-English definitions for the terms you'll encounter on your financial journey.
An asset that a lender accepts as security for a loan, which can be seized if the borrower stops making payments.
A court order that allows a lender to collect the remaining balance on a loan if the sale of collateral did not cover the debt.
A loan or lease specifically designed to help business owners purchase expensive machinery, vehicles, or technology. The equipment itself typically acts as collateral for the debt, which can result in lower interest rates.
Home Equity Line of Credit is a flexible loan that uses your home as collateral, allowing you to borrow money as needed up to a certain limit and pay it back over time. It functions like a credit card for your house, where your home's value acts as your spending limit.
A type of loan where the borrower uses the equity of their home as collateral to receive a lump sum of cash.
A loan specifically used to purchase real estate, where the property itself serves as collateral for the debt.
A loan where the lender's only remedy in the event of default is to seize the pledged collateral, with no right to pursue the borrower's other assets.
A loan that allows the lender to seize the collateral and also pursue the borrower's other assets if the collateral value does not cover the full debt.
A loan in which the borrower pledges an asset, such as a car or house, as collateral for the loan.
A short-term, high-interest loan where the borrower uses their vehicle's clear title as collateral to secure the funds.
A loan that is issued and supported only by the borrower's creditworthiness, rather than by any type of collateral.