You haven't provided the statements to choose from, but I can provide a true statement regarding loan collateral:

"A loan collateral is an asset or property that a borrower pledges to a lender as security for a loan."

Collateral serves as a form of protection for the lender in case the borrower defaults on the loan. If the borrower fails to repay the loan according to the terms of the agreement, the lender may seize and sell the collateral to recover the outstanding debt. Collateral can take various forms, including real estate, vehicles, equipment, inventory, or financial assets like stocks or bonds.