
Collateral
Collateral in aviation refers to assets or securities that are pledged as security for a loan. In the context of aircraft financing, collateral can include the aircraft itself, as well as any spare parts, engines, or other equipment associated with the aircraft. Collateral is used to mitigate the risk of default by the borrower, as the lender can seize and sell the collateral to recover their losses in the event of a default. Collateral is an important consideration in aircraft financing, as lenders will typically require a significant amount of collateral to secure a loan.
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