formal 3K

Collateral

UK //kəˈlæt.ər.əl// US //kəˈlæt.ər.əl// Pronunciation

Definition

Something pledged as security against a loan or obligation.

Listen to definition

In simple words: Something given to secure a loan or guarantee something.

Examples

• The bank required collateral in the form of property to secure the loan.
• He put up his car as collateral for the personal loan.
• The agreement included collateral to protect both parties involved.
• In terms of collateral damage, the bombings affected innocent civilians.
• She felt more secure knowing there was collateral backing the investment.

Usage notes

Typically used in financial contexts. Avoid in casual conversations. Can also refer to secondary effects or consequences.

Grammar pattern

use as a noun

Memory hint

Think of 'collateral' as 'collateral security' - imagine cash backing your loan.

Collocations

• provide collateral
• collateral damage
• offer collateral
• collateral requirements
• collateral security

Synonyms

• security
• guarantee
• assurance
• pledge
• deposit

Common mistakes

• Confused with 'collateral damage' which specifically refers to unintended harm.
• Using in informal contexts where simpler terms would be better.
• Misunderstanding the financial context as non-financial.