A "kabja file loan" involves a lender retaining possession of important documents or assets until the loan is repaid. This practice typically applies to loans where physical documents, such as property deeds or vehicle registration papers, serve as security.
The lender holds these documents to mitigate the risk of default, ensuring they can take legal action or possess the pledged asset if necessary.
Legal agreements outline the terms, including interest rates, repayment schedules, and conditions for document return.
Borrowers must carefully consider the implications of pledging kabja files, ensuring they understand the rights and responsibilities associated with such arrangements.