Pledged collateral refers to assets that are used to secure a loan. The borrower pledges assets or property to the lender to guarantee or secure the loan. This means that the borrower still retains the ownership of the property, but the lender has a claim against it.
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Generally, you should have a written agreement to make things crystal clear. Having it in black and white helps avoid any misunderstandings later on.
Typically, this kind of guaranty comes from family, friends, or even business partners who trust you enough to back your financial commitments without needing collateral.