An old Indian walks into a bank and asks for a $5000 loan.
Clerk: 'What are you going to do with the money?'
Indian: 'I'm going to go into the city and sell my handmade jewellery.'
Clerk: 'Do you have collateral?'
Indian: 'What's collateral?'
Clerk: 'Collateral is something of value that can cover the amount of the loan. For example, do you have a car?'
Indian: 'Yes, I have a 1949 Ford truck'
Clerk: 'That won't do. Do you have livestock?'
Indian: 'Yes, I have a horse'
Clerk: 'How old is it?'
Indian: 'I don't know, it doesn't have teeth.'
After some negotiations, the Indian and the clerk settle on collateral.
The clerk does all the paperwork and gives the Indian $5000.
A few weeks later, the Indian returns to the bank, walks up to the same clerk, takes out a huge wad of bills and returns the loan.
Clerk: 'I see your jewellery sold well. What are you going to do with the rest of the money?'
Indian: 'I will keep it in my teepee.'
Clerk: 'No need to do that. You can make a deposit in our bank.'
Indian: 'What's a deposit?'
Clerk: 'A deposit is when you give money to the bank, the bank cares for it, and when you want it, come back to the bank and get your money.'
Indian (after thinking for a moment): 'And what does the bank have as collateral?'