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Abstract
There are many credit sources in the rural areas. Loans obtained are used for a wide range of activities. These loans practices involve various forms of guaranties, both physical and moral. Pledging assets as collaterals is a widely used form of physical guaranty existing found in the rural area. A study on this topic in Bafou (a Bamileke village of West Cameroon) has revealed that pledging assets loan collaterals is widely practiced. Land plots rank first, followed by coffee farms. Productive assets are preferred because during the loan period, creditors may use the productive capability as interest. In case of default, these collateral's are rarely sold, du to various social and economic constraints. So, when the loan can not be repaid, the creditor will simply withhold the asset until the complete settlement, either by repayment, or from income generated by the pledged asset. Interest payment on these loans are mostly implicit, but it plays a key role in contract negotiations. So far, the contribution of these practices to the financing of rural production has been rather poor.