Collateralized borrowing is a financial practice where a borrower provides an asset, known as collateral, to secure a loan. This collateral can be anything of value, such as real estate, stocks, or bonds. If the borrower fails to repay the loan, the lender has the right to seize the collateral to recover their losses. This method reduces the risk for lenders, allowing them to offer loans at lower interest rates compared to unsecured loans. It also enables borrowers to access funds while leveraging their assets, making it a popular choice for individuals and businesses seeking financing.