What does it mean to say that a borrower "gives collateral"?

Question $1$ options:

The lender has no property interest in the event that the borrower defaults on the loan.

The lender has a property interest in the event that the borrower defaults on the loan.

A party other than the borrower or the lender has a property interest in the event that the borrower defaults on the loan.

The borrower has a priority property interest in the event that the borrower defaults on a loan.