What Does Hypothecation Mean In Lending? | Bankrate Hypothecation refers to the process of using something as collateral for a loan It’s the way the lender protects itself if the borrower doesn’t repay the money or violates the loan agreement
Hypothecation | Meaning, Example, Vs Mortgage, Vs Pledge, Documentation Hypothecation means offering an asset as collateral security to the lender The ownership lies with a lender, and the borrower enjoys the possession In the case of default by the borrower, the lender can exercise his ownership rights to seize the asset
Hypothec - Wikipedia The main purpose of hypothecation is to mitigate the creditor's credit risk If the debtor cannot pay, the creditor possesses the collateral and therefore can claim its ownership, sell it and thus compensate the lacking cash inflows
What Does Hypothecation Mean? - Experian With hypothecation, you use collateral to secure a loan without giving it to the lender In some cases, the asset you're purchasing acts as the collateral; in others, you use an asset you already own to secure the loan
hypothecate | Wex | US Law | LII Legal Information Institute Hypothecation creates a right by the creditor to liquidate the property to satisfy the debt in the event of default If the debt is not paid, the creditor may have the property seized to satisfy the debt
What Is Hypothecation? Definition, Examples Why It Matters Hypothecation is a financial practice where an asset is used as collateral for a loan, but the borrower retains ownership and control over the asset This arrangement enables lenders to secure their risk without immediately taking possession of the asset
Hypothecation - Definition, Examples, Cases, Processes The term “hypothecation” describes the transaction a person makes when he puts up an asset as collateral but still owns that asset A common example of this is a mortgage