To help ensure the repayment of a loan a financial institution will want security against the loan.

Question

Quizplus · Accepted Answer

This is true. A financial institution will often ask for collateral or some form of security against a loan in order to mitigate the risk of default. This gives them some assurance that if the borrower is unable to repay the loan, the institution can seize and sell the asset used as collateral to recoup some or all of the loan amount.

To Help Ensure the Repayment of a Loan a Financial