A farmer took a loan from his local bank, but he had to deposit his property paper as security to do so.

What is the property placed against the loan referred to as?

Collateral security

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Solution

The correct option is A Collateral security
Collateral security is any object the borrower has to deposit with the lender for a loan. It is called security because the lender can sell it off and recover the money lent to the borrower if the loan is not repaid.

Banks provide loans only for a certain percentage of the value of collateral security. It is called the lending margin.

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A farmer took a loan from his local bank, but he had to deposit his property paper as security to do so. What is the property placed against the loan referred to as?

A farmer took a loan from his local bank, but he had to deposit his property paper as security to do so.

What is the property placed against the loan referred to as?