Pledged Asset


DEFINITION of 'Pledged Asset'

An asset that is transferred to a lender for the purpose of securing debt. The lender of the debt maintains possession of the pledged asset, but does not have ownership unless default occurs.

BREAKING DOWN 'Pledged Asset'

A pledged asset is returned to the borrower when all conditions of the debt have be satisfied.

Home buyers can sometimes pledge assets, such as securities, to lending institutions in order to reduce the necessary down payment. Thus, these securities would not have to be sold in order to meet the down-payment requirements, allowing for any capital appreciation while maintaining the associate mortgage benefits.

  1. Mortgage

    A debt instrument, secured by the collateral of specified real ...
  2. Collateral

    Property or other assets that a borrower offers a lender to secure ...
  3. Capital Appreciation

    A rise in the value of an asset based on a rise in market price. ...
  4. Default

    1. The failure to promptly pay interest or principal when due. ...
  5. Hypothecation

    The established practice of a borrower pledging an asset as collateral ...
  6. Loan

    The act of giving money, property or other material goods to ...
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