hypothecation
/haɪˌpɑθəˈkeɪʃən/
noun
- The practice of using an asset as collateral for a loan, especially when the borrower keeps possession of the asset (e.g., using a house or car as security for a mortgage or car loan).
- The bank required hypothecation of the property before approving the mortgage.
- In car loans, hypothecation allows you to drive the vehicle while the lender holds a claim on it.
- The company used hypothecation of its inventory to secure a line of credit.
- A formal agreement or legal arrangement where property is pledged as security for a debt, without transferring ownership or possession to the lender.
- The contract included a clause about hypothecation of the equipment.
- Hypothecation is common in business loans where machinery remains on the borrower's premises.
- The farmer used hypothecation of his crops to get a seasonal loan.
Synonyms