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Single Answer MCQ
Q-00045463

If a borrower defaults on a loan, what may happen to their collateral?

1

It will be ignored by the lender

2

The lender may seize and sell the collateral

3

The borrower can keep it indefinitely

4

It will be converted into cash directly

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Sandeep Chaturvedi

Sandeep Chaturvedi

CBSE Social Science & Humanities Reviewer

Social science and humanities educator with 14+ years of experience reviewing CBSE SST, economics, commerce, arts, and vocational content.

M.A. HistoryM.A. Political ScienceB.Ed.

Answer and Solution

Answer

B. The lender may seize and sell the collateral

Solution:

If a borrower defaults on a loan, the lender may seize and sell the collateral. This process allows the lender to recover some or all of the loan amount.

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