noun

collateral

/kəˈlætərəl/ · say it: kuh·LAT·uh·ruhl

an asset pledged as security for repayment of a loan

In Banking & Finance

In more detail

1. (noun) property or assets that a borrower offers to a lender as a guarantee that a loan will be repaid

2. (adjective) less important or secondary; happening as a side effect

Examples

1. The bank asked for collateral, such as a house, before approving the mortgage.
2. The storm caused damage to several buildings as a collateral effect of the high winds.

How to use collateral

As a noun, collateral is a finance term for assets pledged to secure a loan; it's formal and used in banking and legal contexts. As an adjective, it means secondary or incidental, often used to describe unintended consequences (especially 'collateral damage' in military contexts). The noun sense is more common in business; the adjective sense appears across both formal and informal registers.

Common phrases

collateral damage
put up collateral
collateral security
collateral effect
collateral benefits
serve as collateral

Synonyms

security · pledge · guarantee · deposit · assurance

Opposites

principal · primary · direct

Word family

collaterally (adverb)

A common mistake

Learners sometimes confuse the noun sense with the collateral item itself—remember that collateral is what you give as security, not what you receive from a lender.

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