Loans
Collateral
pronounced: [C-o-l-l-a-t-e-r-a-l]
An asset pledged as security for a loan that the lender can seize if the borrower defaults.
Common collateral includes property, gold, fixed deposits, and marketable securities.
Example
A ₹5 lakh FD at 7.5% p.a. for 1 year earns ₹37,500 in interest. If the interest is compounded quarterly, the effective rate is slightly higher at ~7.65%, earning ₹38,250.
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Last updated: 21 May 2026