When we ask for a loan the lender has to make sure there are other properties or assets that, in the case of the loan payments not being made, can be seized by the lender.
These assets or properties are called collateral. The action of the lender reclaiming the collateral is called lien.
So, we can say that "When lenders look at collateral, they are looking to see if an individual has some way to secure the loan in case of payments not being made."
The type of collateral depends on the type of loan the borrower asks for.