Question

Why do banks often require collateral before granting loans to customer?

Answer 1

Before a lender issues you a loan, it wants to know that you have the ability to repay it.

Step-by-step explanation:

Answer 2

Before a lender issues you a loan, it wants to know that you have the ability to repay it. That's why many of them require some form of security. This security is called collateral which minimizes the risk for lenders. It helps to ensure that the borrower keeps up with their financial obligation. Explanation: hope it helps