Which of the following could serve as collateral for a loan?

Which of the following could serve as collateral for a loan?

• A. Real estate
• B. A wage garnishment
• C. A social security number
• D. A driving license

Answer: (A)

Collateral is something of value pledged to secure a loan, giving the lender a claim if the borrower can’t repay. Real estate fits this role well because it represents a substantial, transferable asset that can be sold to recover funds if needed. A wage garnishment isn’t collateral—it’s a method a creditor might use to collect after a default. A social security number is just an identifier, not a pledged asset. A driving license isn’t an asset a lender can claim if a loan goes unpaid. So real estate is the asset that can serve as collateral.

Collateral is something of value pledged to secure a loan, giving the lender a claim if the borrower can’t repay. Real estate fits this role well because it represents a substantial, transferable asset that can be sold to recover funds if needed. A wage garnishment isn’t collateral—it’s a method a creditor might use to collect after a default. A social security number is just an identifier, not a pledged asset. A driving license isn’t an asset a lender can claim if a loan goes unpaid. So real estate is the asset that can serve as collateral.