Social Science CBSE Class 10 Sample Paper for 2023 Boards

Read the information given below and select the correct option

Rohan has taken a loan of Rs.5 lakhs from the bank to purchase a house on 12% rate of interest.

He has to submit papers of new house and salary record to the bank. What is this process called as?

  1. Interest Rate
  2. Collateral
  3. Principal Amount
  4. Instalments

 

Answer:

So, the correct answer is (B): Collateral .

 

Explanation,

Collateral is an asset that the borrower owns (such as land , building , vehicle , livestock , and deposits with banks ) and uses this as a guarantee to a lender until the loan is repaid.

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Davneet Singh

Davneet Singh has done his B.Tech from Indian Institute of Technology, Kanpur. He has been teaching from the past 13 years. He provides courses for Maths, Science, Social Science, Physics, Chemistry, Computer Science at Teachoo.