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”; col- ¹ lateral

Example Sentences

Banks might also get the right to decide whether a loan can be used as collateral.

From The Wall Street Journal • Apr. 1, 2026

The clearinghouses hold the collateral on each side of a contract, transferring risk from trading parties to the clearinghouse itself.

From Barron's • Mar. 24, 2026

It classifies any collateral damage as an attack.

From BBC • Mar. 23, 2026

Investors can place trades on the Hyperliquid decentralized exchange, using cryptocurrency as collateral.

From MarketWatch • Mar. 20, 2026

Because Bear Stearns was big and important, and Cornwall Capital was a garage band hedge fund, Bear Stearns hadn’t been required to post collateral to Cornwall.

From "The Big Short" by Michael Lewis

Related Words

• ancillary