The correct answer is Collateral. Collateral is an asset or property that an individual or entity offers to a lender as security for a loan. It is used as a way to obtain a loan, acting as a protection against potential loss for the lender should the borrower default. Additional InformationCollateral minimizes the risk for lenders. If a borrower defaults on the loan, the lender can seize the collateral and sell it to recoup its losses. Mortgages and car loans are two types of collateralized loans. A secured loan is a loan in which the borrower pledges some asset (e. g. a car or property) as collateral for the loan, which then becomes a secured debt owed to the creditor who gives the loan.