Tagatisõlvõlg

Tagatisõlvõlg refers to a type of debt where an asset or collateral is pledged to secure the loan. If the borrower fails to repay the debt according to the agreed terms, the lender has the right to seize and sell the pledged asset to recover their losses. This collateral can include real estate, vehicles, or other valuable possessions. The value of the collateral is typically assessed to determine the maximum loan amount. Tagatisõlvõlg is common in both personal and business lending. For individuals, mortgages are a prime example of tagatisõlvõlg, where the property itself serves as collateral. Similarly, car loans use the vehicle as security. In a business context, companies might use equipment, inventory, or even intellectual property as collateral for loans. The presence of collateral generally lowers the risk for the lender, which can lead to more favorable interest rates and loan terms for the borrower compared to unsecured loans. However, it also means that default carries the significant risk of losing the pledged asset. The specific procedures for seizing and selling collateral in cases of default are usually outlined in the loan agreement and are subject to relevant laws and regulations.