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1 year ago
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What Is a Pledged Asset?
In return for lending funds, a lender holds the collateral asset. This type of asset is called a pledged asset which is a valuable possession, and in order to secure a debt or loan, it is transferred to a lender. Pledged assets can have other applications as well, such as reducing the interest rate or down payment, that is typically required for a loan. Examples of pledged assets can include cash, stocks, bonds, and other equity or securities. Once the debt is fully satisfied, the lender returns the pledged asset back to the borrower. Finally, the type and value of pledged assets for a loan are usually negotiated between the lender and borrower.
