collateral

American  

[kuh-lat-er-uhl] / kəˈlæt ər əl /

noun

1. Finance. property or other assets pledged by a borrower as security for the repayment of a loan.

   He gave the bank stocks and bonds as collateral for the money he borrowed.

2. Anatomy.

   1. a subordinate or accessory part.

   2. a side branch, as of a blood vessel or nerve.

   3. collateral circulation.

3. a relative descended from the same stock, but in a different line.

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adjective

1. accompanying; auxiliary.

   He received a scholarship and collateral aid.

2. additional; confirming.

   collateral evidence;

   collateral security.

3. secured by collateral.

   a collateral loan.

4. aside from the main subject, course, etc.; secondary.

   These accomplishments are merely collateral to his primary goal.

5. descended from the same stock, but in a different line; not lineal.

   A cousin is a collateral relative.

6. pertaining to those so descended.

7. situated at the side.

   a collateral wing of a house.

8. situated or running side by side; parallel.

   collateral ridges of mountains.

9. Botany. standing side by side.

collateral British  

/ kə-, kɒˈlætərəl /

noun

1. 1. security pledged for the repayment of a loan

   2. ( as modifier )

      a collateral loan

2. a person, animal, or plant descended from the same ancestor as another but through a different line

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adjective

1. situated or running side by side

2. descended from a common ancestor but through different lines

3. serving to support or corroborate

4. aside from the main issue

5. uniting in tendency

collateral Cultural  

1. Property or its equivalent that a debtor deposits with a creditor to guarantee repayment of a debt.

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Usage

What does collateral mean in loans? Collateral is an asset, such as a home or a car, pledged by a borrower that a lender accepts as security against a loan in case the borrower for any reason cannot pay back the loan. If a borrower fails to pay back a loan, the lender can seize the collateral and sell it in order to recover the loan amount.

Other Word Forms

• collaterality noun
• collaterally adverb
• collateralness noun

Etymology

Origin of collateral

First recorded in 1350–1400; Middle English, from Medieval Latin collaterālis, equivalent to col- a variant of com- + Latin laterālis “on the side of the body”; see col- ¹ lateral

Explanation

It's what you promise to give someone if you don't repay a loan, like the car you put up as collateral when you take a loan out from the bank. As an adjective, collateral can refer to something indirect or off to the side, like collateral damage. Collateral is the watch you put on the table in a poker game, or the shoes you trade in at the bowling alley. If you pay back your debts, you get your goods back. As an adjective, collateral describes something indirect, like collateral damage (non-soldiers inadvertently killed in war) or collateral relatives such as your second-cousin-once-removed that your mother keeps bugging you to call.

Example Sentences

Ostrover and Lipschultz have since removed those shares as collateral for their loans, the people familiar with the matter said.

From The Wall Street Journal • Apr. 17, 2026

Ostrover and Lipschultz have since removed those shares as collateral for their loans.

From The Wall Street Journal • Apr. 17, 2026

Recall, James suffered a grade 2 sprain of the medial collateral ligament in his left knee in the deciding loss.

From Los Angeles Times • Apr. 17, 2026

Saini says his university did see a slight dip in international admissions after 2023, driven both by tighter visa rules and diplomatic tensions - but calls it "collateral damage" rather than a direct hit.

From BBC • Apr. 14, 2026

The CDO manager’s job was to select the Wall Street firm to supply him with subprime bonds that served as the collateral for CDO investors, and then to vet the bonds themselves.

From "The Big Short" by Michael Lewis

Related Words

• ancillary