Collateral Value

AAA

DEFINITION of 'Collateral Value'

The estimated fair market value of an asset that is being used as loan collateral. Collateral value is determined by appraisal from a qualified expert. If publicly traded securities are being used, then the current price of the securities is the collateral value. However, marketable securities are subject to the margin requirement restrictions mandated by the Federal Reserve Board.

INVESTOPEDIA EXPLAINS 'Collateral Value'

In most cases, the amount of the loan given will not exceed the collateral value of the assets, and will usually be less than its fair market value. This is because most lenders will assess collateral property at its fire-sale value and not its actual cost or current value. This is for both the borrower's and lender's protection.

VIDEO

RELATED TERMS
  1. Working Capital

    This ratio indicates whether a company has enough short term ...
  2. Side Collateral

    A pledge that partially collateralizes a loan. The pledge can ...
  3. Collateral Value Insurance

    A type of business insurance used by lenders to guarantee the ...
  4. Lead Bank

    A bank that oversees the arrangement of a loan syndication. The ...
  5. Bank

    A financial institution licensed as a receiver of deposits. There ...
  6. Collateral

    Property or other assets that a borrower offers a lender to secure ...
Related Articles
  1. Credit & Loans

    A Guide To Debt Settlement

    Find out how you can negotiate your way to a lower debt load by paying up front.
  2. Insurance

    Your First Checking Account

    This owner's manual will show you what to expect from your bank.
  3. Options & Futures

    Choose To Beat The Bank

    From internet banking to credit unions, it's in your power to cut fees and maximize service.
  4. Retirement

    Getting A Loan Without Your Parents

    Use the 5 "W"s to finance your dreams without banking on a second signature.
  5. The annual percentage rate, or APR, is the cost per year of borrowing.
    Credit & Loans

    What's the Annual Percentage Rate (APR)?

    The annual percentage rate, or APR, is the cost per year of borrowing. By law, all financial institutions must show customers the APR of a loan or credit card, which clearly indicates the real ...
  6. Before you sign up for a car title loan, investigate these 8 alternate strategies.
    Credit & Loans

    8 Top Alternatives to Car Title Loans

    Before you sign up for a car title loan, investigate these 8 alternate strategies.
  7. Credit & Loans

    What are the different types of cash advances?

    Find out the different types of cash advances along with their different features to determine which option, if any, is best for you.
  8. Credit & Loans

    Is it better to get a balance transfer or a personal loan to pay off my credit card debt?

    Find out what you should consider before deciding to pay off your credit card debt by taking out a personal loan or using a balance transfer to another card.
  9. Credit card balance transfers can help pay off debts – but they can cost you. Here are some other approaches worth checking out.
    Credit & Loans

    4 Debt-Busting AlternativesTo Balance Transfers

    Credit card balance transfers can help pay off debts – but they can cost you. Here are some other approaches worth checking out.
  10. Sometimes you can find a better deal than a cash advance – but some alternatives are even more pricey. Where to find the cheapest source of quick cash.
    Savings

    8 Quick-Cash Alternatives To Credit Card Advances

    Sometimes you can find a better deal than a cash advance – but some alternatives are even more pricey. Where to find the cheapest source of quick cash.

You May Also Like

Hot Definitions
  1. Commodity

    1. A basic good used in commerce that is interchangeable with other commodities of the same type. Commodities are most often ...
  2. Deferred Revenue

    Advance payments or unearned revenue, recorded on the recipient's balance sheet as a liability, until the services have been ...
  3. Multinational Corporation - MNC

    A corporation that has its facilities and other assets in at least one country other than its home country. Such companies ...
  4. SWOT Analysis

    A tool that identifies the strengths, weaknesses, opportunities and threats of an organization. Specifically, SWOT is a basic, ...
  5. Simple Interest

    A quick method of calculating the interest charge on a loan. Simple interest is determined by multiplying the interest rate ...
  6. Special Administrative Region - SAR

    Unique geographical areas with a high degree of autonomy set up by the People's Republic of China. The Special Administrative ...
Trading Center