Choose that the given statement is true/false:

The collateral demand that lenders make loans against are the vehicle and building of the borrower.

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Detailed Solution

The above statement is true.
Each loan agreement stipulates the interest rate the borrower must pay the lender in addition to the principal repayment. Lenders may also need security (collateral) in exchange for loans. A collateral asset is an asset the borrower holds and uses as a guarantee to a lender up until the loan is repaid. Examples include land, buildings, vehicles, animals, and bank accounts. The lender has the right to sell the asset or collateral as collateral if the borrower defaults on the loan. Because the bank may recover the collateral if you miss payments, this loan typically has a lower interest rate.

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