Question

Which of these statements describes a lien?



the right of a lender to sell collateral to get back the principal if the borrower cannot repay the loan



the right of a lender to refuse a loan if the borrower hasn't repaid previous loans on time



the right of a lender to increase interest rates depending on economic factors

Answer 1

A statement that describes a lien is that it is a claim put on someone's property (i.e.: a vehicle, real estate, construction) in order to secure the payment of a debt. A lien can also be ordered by a judge for nonpayment of a debt. This lien will affect any property owned by the debtor if the debt is not paid.

Answer 2

A.the right of a lender to sell collateral to get back the principal if the borrower cannot repay the loan