C
Loans
Collateral
An asset — usually your car or property — that you pledge to the lender as security. If you don't pay, they take it. That's why secured loans (backed by collateral) have lower interest rates than unsecured personal loans — the lender's got something to fall back on.
Usage Examples
"Bongani financed a Toyota Yaris through Capitec for R120,000. The car itself was collateral — if he missed payments, they'd repossess it. That's why the interest was only 19% (relatively lekker for a car loan)."
"Lerato wanted a bigger personal loan so she offered her property in Limpopo as collateral. The bank allowed a higher amount at a lower rate (18% instead of 24%) because if she defaulted, they could repossess the land. Risky move."
"Sipho took a vehicle finance deal from Standard Bank on a used bakkie. The bakkie was collateral. After six missed payments, the bank's repo agents came to his workplace in Soweto and took it back. He was left with a R30,000 shortfall debt."