Definition of Recourse loan:
Loan agreement under which a borrower gives an undertaking to repay a debt even if the funded asset (acquired with the loan proceeds) cannot be liquidated to cover the loan amount. In case of a default, the lender can seize and sell the funded asset as well as the borrowers un-pledged assets or properties. See also non recourse loan.
Borrowers have several options available to them when they need financing. One type of loan is a secured facility. This kind of debt requires collateral—an asset that a borrower puts down as security. The lender is able to seize this asset and sell it to satisfy the debt in case the borrower defaults.
The term recourse loan refers to a type of loan that can help a lender recoup its investment if a borrower fails to pay and the value of the underlying asset is not enough to cover it. A recourse loan is a form of secured financing. It lets the lender go after the debtor's other assets that were not used as loan collateral or to take legal action in case of default in order to pay off the full debt.
How to use Recourse loan in a sentence?
- A recourse loan allows the lender to seize the collateral and any other assets the borrower has if they default.
- Resource loan contracts generally outline which assets the lender may pursue.
- Most hard money loans are recourse loans.
- I was offered to pay back a recourse loan and I denied because I knew how those worked and did not want anything to do with one.
- Assets that a lender may seize for a recourse loan include deposit accounts and income sources.
- You should know where you stand in a recourse loan and make sure to follow all of the guidelines set forth in it.
- You may need to take out a recourse loan if you do not have the cash on hand but need to get some quickly.
- Lenders prefer recourse loans while borrowers prefer non-recourse loans—loans that only allow the seizure of the collateral.
Meaning of Recourse loan & Recourse loan Definition