Anything that is put up to secure a loan is known as security. It may also be known as collateral in many loan documents. This security can take multiple forms. Some people may put up their home as security for a home equity loan. This allows the bank to offer a much lower interest rate than it would for an unsecured loan. However, anything that is of value may be considered as security for a home loan. A security deposit is a cash deposit that is given to a bank or landlord to secure the property. It may also be used to cover damage done to a rental property upon the termination of a lease. If a loan is not repaid, the lender will take the security asset to an auction to be sold. The remaining balance of the loan may need to be paid by the borrower.
