Final answer:
Collateral is the right to use property as security for a debt or to allow other liens to be placed on the property, which provides security for the lender and increases the chances of loan approval.
Step-by-step explanation:
The right to collateral is the right to use the property as collateral for a debt or to allow other liens to be placed on the property. Collateral is something valuable—often property or equipment—that a lender would have a right to seize and sell if the borrower does not repay the loan. This provides security for the lender and increases the chances of loan approval.
For example, let's say you want to get a loan to buy a car. The lender may require you to use the car as collateral, which means if you fail to repay the loan, the lender has the right to take possession of the car.
Having collateral gives lenders a sense of security that they will be able to recover their money even if the borrower defaults on the loan.