Hypothec

Ok kiddo, imagine you have two toy cars - a red one and a blue one. Now, your friend wants to borrow your red car for a day but as a responsible kid, you want to make sure you still have your blue car as a backup. So, you tell your friend that they can borrow the red car but you will keep the blue one as a security just in case they don't return the red car or something happens to it.

Hypothec is just like that, but with money instead of toys. When someone borrows money, they give something valuable as security to the lender in case they can't repay the borrowed money. This security is called a hypothec. It could be anything valuable like a house, car, or even stocks.

So, just like you kept your blue car as security, the lender keeps the hypothec to make sure they can recover their money in case the borrower can't repay the loan. And once the borrower repays the loan, the hypothec is returned back to them.

Hope that helps you understand the concept of hypothec, kiddo!