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TeachMeFinance.com - explain security agreement security agreement -- a document or section of a note that contains a description of the loan collateral. It establishes the lender's rights to the collateral in the event of default on the loan. Copyright © 2005 by Mark McCracken, All Rights Reserved. TeachMeFinance.com is an informational website, and should not be used as a substitute for professional financial or legal advice. TeachMeFinance.com and its owner recommend consultation with a professional financial advisor prior to any investment or financial decision. Please read our disclaimer.