Security Interest

A legal claim on collateral that has been pledged, usually to obtain a loan. The borrower provides the lender with a security interest on certain securities/assets which can be repossessed in the event that timely obligation payments are not met. 



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In the event that the lender fails to uphold a proper debt repayment schedule, the holder of the security interest takes possession and is able to sell the underlying collateral. In the event of bankruptcy secured lenders have precedence over unsecured lenders.