Collateral Tracking

Collateral tracking is the process of monitoring and managing assets pledged as security for a loan or credit. This process ensures that the collateral remains sufficient to cover the lender’s risk in the event of borrower default. It involves regularly assessing the value, condition, and ownership status of the collateral to confirm it aligns with the terms of the loan agreement.

This tracking can involve physical inspections, appraisals, and verification of ownership documents. The process can also be called asset tracking. In this, movable assets like vehicles, include GPS tracking or regular reporting. For real estate, it might involve periodic market valuations and checks for liens or encumbrances.