Collateral is something valuable you pledge to back a loan. If you can't repay, the lender can take it to recover what's owed.
Collateral is an asset pledged by a borrower to secure a loan, giving the lender a claim against it in the event of default.
Collateral reduces a lender's risk, which can affect whether you're approved and on what terms. In farming, land, equipment, and livestock are common collateral.
A tractor purchased with equipment financing often serves as the collateral for that same loan.
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