It's what you promise to give someone if you don't repay a loan, like the car you put up as collateral when you take a loan out from the bank. As an adjective, collateral can refer to something indirect or off to the side, like collateral damage.

Collateral is the watch you put on the table in a poker game, or the shoes you trade in at the bowling alley. If you pay back your debts, you get your goods back. As an adjective, collateral describes something indirect, like collateral damage (non-soldiers inadvertently killed in war) or collateral relatives such as your second-cousin-once-removed that your mother keeps bugging you to call.

Definitions of collateral
  1. adjective
    accompanying; concomitant
    collateral target damage from a bombing run”
    being of second rank or importance or value; not direct or immediate
  2. adjective
    serving to support or corroborate
  3. adjective
    situated or running side by side
    collateral ridges of mountains”
    being everywhere equidistant and not intersecting
  4. adjective
    descended from a common ancestor but through different lines
    “cousins are collateral relatives”
    synonyms: indirect
    connected by kinship, common origin, or marriage
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    direct, lineal
    in a straight unbroken line of descent from parent to child
    matrilineal, matrilinear
    based on or tracing descent through the female line
    patrilineal, patrilinear
    based on or tracing descent through the male line
    tracing descent from either the paternal or the maternal line only
    connected by kinship, common origin, or marriage
    show more antonyms...
  5. noun
    a security pledged for the repayment of a loan
    see moresee less
    guarantee, guaranty
    a collateral agreement to answer for the debt of another in case that person defaults
    type of:
    security interest
    any interest in a property that secures the payment of an obligation
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