Bitcoin Forum

Maybe I'm just stupid but what's the meaning of collateral when you're offering one for a loan?

a simple google search gave me this

"something pledged as security for repayment of a loan, to be forfeited in the event of a default."

this can help you too

collateral is something you dont want to get rid of.   Your collateral should be worth 100-120% of the value of the loan to incentivize repaying the loan.
IF you didn't care about losing your collateral, then its probably something you can just sell for the cash you need and not take a loan, right?
Collateral is general something you DONT WANNA LOSE, and why its IS used for loans  :)

Hope that helps explain!

Well yes I know what a collateral means but in this case on this forum, because i may be wrong, but collateral is taken when you fail to repay your loan, right? and returned to you if you do, yeah?

A collateral is an assurance for the lender. If you default the loan then he will keep the collateral and sell or keep it to cover for the loan. You will not get it back beause it'll act as the repayment for the loan that you defaulted. If you pay, yes, the collateral will be sent back as it was originally sent by you.

that is correct. collateral is something that can be easily sold and when sold the money gained from it can cover the amount of loan and if the price of that thing is changing, they factor in the change too and take a bigger amount.
for example the bank takes your house as collateral and if you don't pay back your loan after a while they come and throw you out and sell your house. but if you pay your loan on time at the end of the time you get your house back.
the difference is the bank can find you and legally take your house so you stay in the house until that happens, but here you have to give up the collateral to a third party because if you don't pay the collateral there is no way the lender can find you.

collateral is something that you pledged to the lender. The lender can sell for $$ in the event you don't pay up and get some $$ back

Collateral is something pledge as security incase of default for the repayment of loan and other borrowing. If the borrower default in the repayment he will forfeit the object he or she used as a collateral.   collateral is an old day practice and it was copy from what happened in the bible. Juda has to keep his staff and clothes with an harlot as a collateral when he has sex with her on credit.

Some reasons you must know about that, There is the payback date about your loan.
The simple answer if you pay it in the outside of due date about your loan, and lenders will be able to take your collateral as your compensation.
The main thing about the payback date for your loans.
If the lenders give a remission for you and you will be able to take back your collateral as you can pay a fine for them.
But all of it depends on the loan agreement.
You must read them before asking a loan for yourself.

Collateral is something similar to commodity, stocks, documents, gift cards used for the lending needs. Use of collateral is a form of indicating you as an trusted user. Also it helps the lender to be on the safer side, even if the user didn't repay the amount within the mentioned time. Always the collateral needs to be similar or higher to the value of amount that's been got from the lender.

Yes. Collateral is all abou when you didn't pay with the right time it is all about the one who will load and the one who will give the loan it is agreement. Some of members in this forum lot of them use their account as collateral so if they not meet the due date their account will be surrender to the giver of the loan. It's all about their agreement about terms in lending so if you are planning to loan make sure to pay it before the due date.

The main purpose of collateral is to guarantee the lender that he will suffer no loss in case that you default the loan. This is the reason why the collateral should be in equal or bigger value then the sum you have borrowed. But collateral should be something that could be easily sold or monetized other way so that lender has use of it.

This is what I take from a source out there, it might be a bit enlightening: Collateral is a property or other asset that a borrower offers as a way for a lender to secure the loan. ... Since collateral offers some security to the lender should the borrower fail to pay back the loan, loans that are secured by collateral typically have lower interest rates than unsecured loans

Collateral is insurance that you will pay the money you borrowed. Why collateral needs to be higher then the borrowed amount, simply cause lender can sell it right away for the amount he loaned. How banks give credit to people and companies? In the same way, they estimate what someone have and only then give the loan, that kind of practice is present everywhere.
You are not stupid, but just think about this from another angle, what if you need to loan 100 000 dollars to someone, what can you do to insure yourself? For what will you ask?

collateral is something that you should offer to the lenders when you want to borrows some money but its depend from the deal. because we see that if we want to borrows something with my friends, we don't have to make collateral and this could be of trust from our friends. i am sorry if this is wrong but i only know like this.

To put another way that would be hard for the op to not forget.

It is something that the loan sharks take when you fail to repay them when you say you will repay them.
The collateral is your fingers or your knee caps. ;)

Capisce? ;D

You can just simply google it to get the definition of a collateral.No,your not stupid just a lazy man likes to be spoonfeed-no offense :) Well,collateral is a thing that the borrower should provide if he tend to borrow a money or shall we say it acts as a guarantee when he dont plan to repay the loan and the collateral should be asked is 120% more valuable on the money that have been borrowed.

Anything from a bitcointalk account to any goods (which is equivalent to 110-120% of the required amount of loan or as asked by the lender) can be considered as a collateral here. In one word, it is a type of "security" or "guarantee" that the lender has, when you are asking for a loan and in case, you are unable to repay the loan.

 It's not that you're stupid; you're simply ignorant of the meaning of the word.  This is repairable whereas "stupid" probably isn't.

I remember I read a book entitled "Stupid is Forever", so you're maybe right dude. I think he just lacking common sense, how come a person who knows how to use internet that does not know how to search things in google. I guess technology nowadays made us intelligent, we have to utilize it.

which also make little sense for you to send, because you can simply use your collateral to get out of your trouble instead of asking for a loan

the cases on which you can't sell your collateral but still you need a loan can be counted on one hands, this mean that they just want to scam...