Q: I took a short-term loan of $4,000 from my neighbor. To assure him that I would repay promptly, we agreed that if I wouldn’t pay back in two months, he could take my car, which is worth $10,000. Is such an obligation valid?

A: This kind of exaggerated, conditional obligation is referred to in halacha as asmachta (B.B. 168a). This means an obligation that was made just to reassure the lender that the borrower will repay. An asmachta obligation is not viewed as a serious commitment and is not binding (C.M. 207:2,13).

An asmachta obligation is valid, however, if it was made (or if stated that it was made) with a kinyan sudar in a reputable beis din. In this case, we view the obligation as one that was meant seriously (207:15). Alternatively, if the agreement stipulated that ownership of the car is retroactive to the time of the loan (mei’achshav), the Shulchan Aruch does not consider it asmachta, whereas the Rama does (207:14).

In a case where the borrower obligates himself to reimburse any collection costs, some authorities maintain that this is not considered asmachta, since the borrower caused the lender an actual loss (SM”A 61:12; Pischei Choshen, Halva’ah 2:ftnt. 105).