Collateral
/kəˈlætərəl/
Definitions
2 meaningsSecurity or guarantee, typically in the form of assets, pledged for the repayment of a loan.
/ˈkɒlætərəl/
Something pledged as security for a loan.
The bank asked for collateral before issuing the mortgage.
💡 Simply: Imagine you want to borrow money, but the lender is worried you won't pay back. Collateral is like a promise – you give something valuable to the lender (like a car or house) to guarantee that you’ll pay. If you don’t pay, the lender gets to keep your collateral.
👶 For kids: It's something you give to someone to make sure you'll give back what you borrow, like leaving your toy with a friend until you give their toy back.
More Examples
He used his car as collateral for the loan.
How It's Used
"The bank required collateral before approving the loan."
"The defendant's assets served as collateral in the lawsuit."
Secondary, additional, or accompanying something else.
/kəˈlætərəl/
Secondary or subordinate.
The collateral damage from the storm was extensive.
💡 Simply: Collateral damage is like an unintended accident. It's something that happens alongside the main event, but wasn't the main goal. Think of a battle – the main goal is to win, but collateral damage might be nearby buildings getting destroyed.
👶 For kids: It's something extra that happens when something else happens, but wasn't meant to.
More Examples
The collateral benefits of the program were significant.
How It's Used
"The collateral damage from the surgery was minimal."
Synonyms & Antonyms
Synonyms
From Middle French *colateral, from Late Latin *collateralis, from Latin con- 'together' + latus 'side'. Originally referring to something placed side-by-side as security.
The term's usage in finance solidified in the 18th century.
Memory tip
Think 'co-lateral' – things placed side-by-side to secure something else.
Word Origin
"situated side by side"