Collaterals are assets or properties that a borrower offers to a lender as security for a loan. If the borrower fails to repay the loan, the lender has the right to seize the collateral to recover their losses. Common examples of collaterals include real estate, vehicles, and savings accounts. In finance, collaterals help reduce the risk for lenders, making it easier for borrowers to obtain loans. By providing collateral, borrowers may also secure better loan terms, such as lower interest rates. This practice is common in various types of loans, including mortgages and auto loans.