Collateral

Wed Jul 21, 2004 12:20 am

Can someone explain to me what collateral exactly is?

Wed Jul 21, 2004 12:22 am

Collateral is what you pay someone to be lent an item.For example, you may pay someone 100K to borrow an Icy Snowflake, that's called collateral.

Wed Jul 21, 2004 12:23 am

Ok, if you want to borrow an item, the owner may say they require collateral. This is basically the amount of NP that the item is worth. Collateral is asked for, as it stops you from stealing the item (you want your NP back)

Hope that made it clearer

Wed Jul 21, 2004 12:27 am

When you buy a house and take out a loan to pay for it, you put the actual house up as collateral until the loan is paid in full. That way, if you don't pay the loan, the lendor has the ownership to your house. Same with a car loan. So, in Neopets terms, if you put down something as collateral in order to borrow an item, the other person has the right to keep the stuff you put down as collateral if you don't return the item.

Which is why, if you are lending out items for collateral, you should always get collateral that has the same value in nps as the item that you are lending.

Wed Jul 21, 2004 1:42 am

collateral, is what has to be given up if you fail.
(lose the house for example in a loan arrangement, or the loss of life in a war for example)

Wed Jul 21, 2004 3:20 am

You usually get it back in part or in whole.

Wed Jul 21, 2004 4:30 am

On neopets you always get the collacteral back though.

Wed Jul 21, 2004 7:07 am

you temprorily buy it, btu then receive your money/items back

Wed Jul 21, 2004 10:44 pm

Okay, thank you very much everyone, moderators can lock this.