What is something of value given by a borrower to back up their promise to repay a loan?

The term that refers to something of value provided by a borrower to secure a loan is collateral. Collateral serves as a protection for the lender in case the borrower defaults on their loan obligations. By pledging collateral, the borrower assures the lender that they have a tangible asset, such as property, vehicles, or equipment, which the lender can claim if repayment is not made as agreed.

This mechanism reduces the lender's risk because it provides an additional layer of security beyond the borrower's promise to repay. In situations where the borrower fails to meet their financial obligations, the lender can utilize the collateral to recover some or all of the money lent.

The other terms hold different meanings: equity refers to ownership interest in an asset after liabilities are deducted, a guarantor is a person who agrees to be responsible for someone else’s debt if the borrower fails to pay, and an asset is any resource owned that has economic value. While these concepts relate to financial transactions or commitments, none fulfill the specific role of securing a loan in the same way collateral does.