|Lenders ask for collateral while lending to borrowers because:|
|(i) Lenders demand collateral (security) against loans. A Collateral is an asset that the borrowers owns (such as-land, building, vehicles, livestocks, deposits with bank).|
|(ii) Lenders use the collateral as a guarantee until the loan (with interest if applicable) is repaid.|
|(iii) If the borrower fails to repay the loan, the lender has right to sell the asset or collateral to obtain repayment.|
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