Financing With Collateral
Loans for collateral allow a person with bad credit to get a fast loan by pledging collateral. Here’s how to borrow money fast by using asset based financing.
A financial crisis can happen to anyone unexpectedly. When times are trying and money is hard to come by, where can one turn to when quick money is needed to deal with unforeseen circumstances like paying for mortgage, home improvements, vehicle repairs, etc. If you are someone with a bad FICO record, it’s not easy to borrow money from bank, let alone getting 5000 signature loans for 6 months. Traditional lenders want to check on your borrowing records, but you know it’s a poor one while private lenders tend to charge very high interests even on a small cash loan. A good alternative between the two is a bad credit loan with collateral, also sometimes termed as asset based financing.
Asset-Backed Personal Loans
Rather self-explanatory, an asset-backed collateral loan is simply a type of secured financing by some moneylenders. These collateral lenders will allow you to borrow money from them in exchange of you pledging an asset against the cash loan. For large sum borrowings, for example in use for business financing, assets may include big ticket items like your house or any real estate, cars and business inventory.
For borrowers with adverse credit who just wish to borrow a short term loan of $1000 – 5000 dollars, you can leverage on the equity in valuables you already own. These can be luxury goods you bought in the past as well as fine jewelry like diamond rings, gold bracelets or that Rolex watch. These are all excellent items you can use as collateral where you can use them to exchange cash for with a bad credit collateral loan.
How Bad Credit Collateral Loan Works?
Once you have decided what in your possessions are valuables you intend to pawn for cash, you must first understand how a personal loan with collateral works before you pledge them away as jewelry loans and ring loans.
Firstly, when you approach a collateral lender, say a pawnbroker, state the amount of money you wish to borrow and the type of collateral you are as pawn goods. Depending on how much you need to borrow money now, there will be a service charge on the loan and this figure will go higher if you go for larger loans.
Using Diamond Ring As A Collateral For A Loan
When assessing your valuables, the pawnbrokers typically will give your diamond ring or silver necklace a 50% valuation of the current market value. These valuations tend to be on the conservative side to protect the pawnbroker’s business interests. It is important to understand that the total valuation on your pawn items does not mean the amount of money you can borrow from them. When you sign for a bad credit loan with collateral, there is a clause which states that when you fail to pay back the money, these collateral goods will then be taken as sold to the pawnbrokers, and you will be liable for any shortfall if the value of the collateral ( already discounted 50% off) is not sufficient to cover the full cost of your loan. In short, you agree to pledge a piece of collateral to the pawnbrokers, where they hold the valuable in their possession until the loan is paid back in full. Failing which, they will seize your valuables.
Collateral Lenders For Bad Credit With Low Payment Installment
A collateral loan with bad credit usually have longer repayment terms than a payday loan. It is common for secured title lenders to give up to 180 days or 6 months for the length of the loan. Some secured title lenders may give monthly installment loans if the size of your collateral is not high enough. You can go on the internet and research on legitimate pawnbrokers, and compare which one is able to give you the lowest APR interest rate. You should also check them on the BBB ( Better Business Bureau) website to see if they are accredited since there are just too many loan scams and unscrupulous online pawnshops on the internet. Do your due diligence and you should be able to get a legitimate bad credit loan with collateral.
- Better Business Bureau
- National Pawnbrokers Association
- Illinois Pawnbrokers Association
- North Carolina Pawnbroker`s Association
- Wikipedia on Asset Based Lending