Recourse
Asset-Backed Securities glossary · Asset Backed Securities
Definition
A loan obligation that extends beyond specific collateral to the borrower's general assets.
Recourse in plain English
Recourse is about how far a lender can chase you if you don't pay. With a recourse loan, if selling the specific thing you borrowed against (say, a car or house) doesn't cover the full debt, the lender can still come after your other money and property to make up the difference. Non-recourse is the opposite: the lender's only claim is that one asset, and if it isn't enough, they eat the loss. Think of it as the difference between 'you can only keep my collateral' versus 'you can keep my collateral AND send me a bill for the rest.'
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