Cross-collateralization occurs when an asset that is not the subject of a loan is used to collateralize that loan.

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Cross-collateralization involves using an asset that is not the primary subject of a loan to secure that loan. This is commonly seen in situations where a lender requires multiple assets to be used as collateral for a loan or when a borrower uses one asset to secure multiple loans.

Cross-Collateralization Occurs When an Asset That Is Not the Subject