What are the Types of Collateral?

Before a lender issues you a loan, it wants to know that you have the ability to repay it. That's why many of them require some form of security. This security is called collateral which minimises the risk for lenders. It helps to ensure that the borrower keeps up with their financial obligation. The five main types of collateral are consumer goods, equipment, farm products, inventory, and property on paper. All can be used as collateral when applying for loans, provided there is a recognisable value associated with the item.