Collateralizes

Part of speech: verb

Definitions

1. To secure a loan by offering assets that act as protection against defaulting on repayments
2. To pledge certain properties or financial resources as a guarantee for a borrowing agreement
3. To use assets as a pledge to back the repayment of a loan

Etymology: Collateral comes from the Late Latin "collateralis", meaning "situated alongside" or "side by side", built from the Latin "com-" ("together") and "latus" ("side"). The sense of a secondary pledge that stands beside a main obligation grew naturally from that picture of things lying alongside one another. English adopted the adjective in the early 1500s, with the noun following as a financial term. The verb "collateralize" is a later formation: the noun "collateral" plus the suffix "-ize", which turns a noun into a verb meaning to make something into, or to provide it as, that noun. So to collateralize a loan is to supply an asset that stands alongside the borrower's promise to repay, to be seized if the promise fails.

Synonyms: secures, guarantees, pledges