A fuller guide to this term is on the way. In the meantime, the related terms below explain the ideas around it.
Related MoneyPedia terms
- DefaultThe failure to repay a debt as agreed after an extended period, which can lead to collections, legal action, or repossession.
- CollateralAn asset you pledge to back a loan, giving the lender the right to seize it if you do not repay as agreed.
- Secured DebtBorrowing backed by collateral, like a house or car, that the lender can take if you fail to repay the loan.
- Auto LoanAn installment loan used to buy a vehicle, secured by the car, which the lender can repossess if you default.
- Deficiency BalanceThe amount you still owe after collateral is repossessed and sold for less than your remaining loan balance.
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Plain-English education — not personalized legal, tax, or investment advice.