Collateral is an item of value (usually money) pledged to secure a loan. Collateral reduces the risk for lenders. Securing your loan justifies the risk to the lender and can increase your chances of approval. Often providing security can get you a better interest rate, as a result of the lowered risk to the lender.
It’s always good to have room to negotiate. With increased chances of approval, lower interest rates and longer terms, you can often get terms that fit your budget. Cutting down the length of the loan might give you a lower overall cost, while extending it can afford you smaller monthly payments.
