col·lat·er·al   (kə-lāt'ər-əl)    adj.   Situated or running side by side; parallel. Coinciding in tendency or effect; concomitant or accompanying. Serving to support or corroborate: collateral evidence. Of a secondary nature; subordinate: collateral target damage from a bombing run. Of, relating to, or guaranteed by a security pledged against the performance of an obligation: a collateral loan. Having an ancestor in common but descended from a different line. n.   Property acceptable as security for a loan or other obligation. A collateral relative. [Middle English, from Medieval Latin collaterālis : Latin com-, com- + Latin latus, later-, side.] col·lat'er·al·ly adv.

Collateral

Col*lat"er*al\, a. [LL. collateralis; col- + lateralis lateral. See Lateral.]

1. Coming from, being on, or directed toward, the side; as, collateral pressure. "Collateral light." --Shak.

2. Acting in an indirect way.

If by direct or by collateral hand They find us touched, we will our kingdom give . . . To you in satisfaction. --Shak.

3. Related to, but not strictly a part of, the main thing or matter under consideration; hence, subordinate; not chief or principal; as, collateral interest; collateral issues.

That he [Attebury] was altogether in the wrong on the main question, and on all the collateral questions springing out of it, . . . is true. --Macaulay.

4. Tending toward the same conclusion or result as something else; additional; as, collateral evidence.

Yet the attempt may give Collateral interest to this homely tale. --Wordsworth.

5. (Genealogy) Descending from the same stock or ancestor, but not in the same line or branch or one from the other; -- opposed to lineal.

Note: Lineal descendants proceed one from another in a direct line; collateral relations spring from a common ancestor, but from different branches of that common stirps or stock. Thus the children of brothers are collateral relations, having different fathers, but a common grandfather. --Blackstone.

Collateral assurance, that which is made, over and above the deed itself.

Collateral circulation (Med. & Physiol.), circulation established through indirect or subordinate branches when the supply through the main vessel is obstructed.

Collateral issue. (Law) (a) An issue taken upon a matter aside from the merits of the case. (b) An issue raised by a criminal convict who pleads any matter allowed by law in bar of execution, as pardon, diversity of person, etc. (c) A point raised, on cross-examination, aside from the issue fixed by the pleadings, as to which the answer of the witness, when given, cannot subsequently be contradicted by the party asking the question.

Collateral security, security for the performance of covenants, or the payment of money, besides the principal security,

collateral

Property or its equivalent that a debtor deposits with a creditor to guarantee repayment of a debt.

collateral 

Collateral

Properties or assets that are offered to secure a loan or other credit. Collateral becomes subject to seizure on default.

Investopedia Commentary

Collateral is a form of security to the lender in case the borrower fails to pay back the loan.

For example, if you open a mortgage, your collateral would be your house. In margin trading, the securities in your account act as collateral in the case of a margin call.

Related Links

Margin Trading Tutorial

See also: Loan, Margin, Mortgage, Non-Recourse Debt, Overcollateralization, Partial Release, Principal, Unsecured Loan

collateral

Assets pledged as security for a loan. In the event that a borrower defaults on the terms of a loan, the collateral may be sold, with the proceeds used to satisfy any remaining obligations. High-quality collateral reduces risk to the lender and results in a lower rate of interest on the loan.

Main Entry: col·lat·er·al
Pronunciation: k&-'la-t&-r&l, -'la-tr&l
Function: adjective
1 a : accompanying as a secondary fact, activity, or agency but subordinate to a main consideration b : not directly relevant or material collateral evidentiary matter> collateral issue>
2 : belonging to the same ancestral stock but not in a direct line of descent —compare LINEAL
3 a : of, relating to, or being collateral used as a security (as for payment of a debt) b : secured by collateral collateral loan> —col·lat·er·al·ly adjective

Main Entry: ¹col·lat·er·al
Pronunciation: k&-'lat-&-r&l, -'la-tr&l
Function: adjective
1 : relatingto or being branches of a bodily part <collateral sprouting of nerves>
2 : relating to or being part of the collateral circulation <collateral circulatoryvessels> <collateral blood flow>

collateral col·lat·er·al (kə-lāt'ər-əl)
adj.

1. Indirect, subsidiary, or accessory to the main thing.
2. Having an ancestor in common but descended from a different line.

n.

1. A branch of a nerve axon or blood vessel.
2. A collateral relative.

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col·lat'er·al·ly adv.