[ kuh-lat-er-uhl ]
/ kəˈlæt ər əl /
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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


col·lat·er·al·i·ty [koh-lat-uh-ral-i-tee], /koʊˌlæt əˈræl ɪ ti/, col·lat·er·al·ness, nouncol·lat·er·al·ly, adverb
Dictionary.com Unabridged Based on the Random House Unabridged Dictionary, © Random House, Inc. 2021


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.

Examples of collateral in a sentence

“A secured loan gets backed by some type of collateral, such as your vehicle or a savings account.”
—”What Is A Personal Loan?” Rocket Loans. Retrieved March 15, 2020.

“Since they don’t tend to have collateral attached, personal loans tend to come with higher interest rates than car and mortgage loans.”
—”The Best Ways To Finance Your Budding Business” Rocket Loans. Retrieved March 15, 2020.

“By contrast, an unsecured personal loan isn’t backed by collateral, which means that a lender will decide whether you qualify based on factors like your credit history and income.”
—”What Is A Personal Loan?” Rocket Loans. Retrieved March 15, 2020.

How to use collateral in a sentence

British Dictionary definitions for collateral

/ (kɒˈlætərəl, kə-) /

  1. security pledged for the repayment of a loan
  2. (as modifier)a collateral loan
a person, animal, or plant descended from the same ancestor as another but through a different line

Derived forms of collateral

collaterally, adverb

Word Origin for collateral

C14: from Medieval Latin collaterālis, from Latin com- together + laterālis of the side, from latus side
Collins English Dictionary - Complete & Unabridged 2012 Digital Edition © William Collins Sons & Co. Ltd. 1979, 1986 © HarperCollins Publishers 1998, 2000, 2003, 2005, 2006, 2007, 2009, 2012

Medical definitions for collateral

[ kə-lătər-əl ]

Indirect, subsidiary, or accessory to the main thing.
Having an ancestor in common but descended from a different line.
A branch of a nerve axon or blood vessel.
A collateral relative.

Other words from collateral

col•later•al•ly adv.
The American Heritage® Stedman's Medical Dictionary Copyright © 2002, 2001, 1995 by Houghton Mifflin Company. Published by Houghton Mifflin Company.

Cultural definitions for collateral


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

The New Dictionary of Cultural Literacy, Third Edition Copyright © 2005 by Houghton Mifflin Harcourt Publishing Company. Published by Houghton Mifflin Harcourt Publishing Company. All rights reserved.