What is collateral security?

Collateral security is a property that borrower offers to lender being security of loan. Collateral security may be primary or secondary.

Collateral is usually something that the bank or person you want to barrow money from can get just in case you couldn't pay them back what you owe. It doesn't have to be worth the money you owe.

It is a form of secondary protection sometimes required by a bank and intended to guarantee a debt obligation.

Specific asset (such as land or building) pledged as a secondary (and subordinate) security by a borrower or guarantor. The principal security is usually the borrower's personal guaranty, or the cash flow of a business. Except for highly creditworthy customers (who can get loans against only their signatures)