Cross Collateralization: Definition, How It Works, Examples
Fundera
OCTOBER 31, 2020
If you’ve ever owned a house or a car, you’re likely familiar with collateralized loans. What this means is that your bank or lender essentially owns the asset—like your house or car—that you’ve pledged to secure your loan. If you default on your loan, the lender will seize and liquidate that asset to recoup the debt. Cross collateral loans do the same thing in practice but alongside an existing collateralized loan.
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