In personal finance, what asset pledged to secure a loan is called what?

In personal finance, an asset pledged to secure a loan is called collateral.

Collateral gives a lender a claim on property if the borrower fails to meet the loan agreement. Common examples include a home securing a mortgage, a vehicle securing an auto loan, and investments securing some lines of credit.

A secured loan generally presents less risk to the lender than an unsecured loan because the lender may be able to repossess or sell the pledged asset, subject to applicable law. The value and condition of collateral can affect approval, borrowing limits, and interest rates.

Collateral is not the same as a down payment. A down payment is money paid upfront toward a purchase, while collateral is property supporting the lender’s claim. Credit cards and most personal loans are commonly unsecured, meaning they do not require a specific pledged asset.