Collateralized Debt refers to a type of loan where the borrower pledges an asset as security for the loan. This means that if the borrower fails to repay the loan, the lender has the right to seize the asset to recover their money. Common assets used as collateral include real estate, vehicles, or financial securities. This arrangement reduces the risk for lenders, as they have a tangible asset to fall back on. It can also lead to lower interest rates for borrowers, since the presence of collateral makes the loan less risky for the lender.