Life can be full of surprises. Geysers burst, cars break down, and children need new braces when you least expect it – and often when you can least afford it! Even with a rainy-day fund in place, you could find yourself in need of extra cash to tie you over. This is where an asset loan could be very useful.
What is an asset loan?
An asset loan is a short-term loan that allows you to borrow money against your valuables. The Loan Company explains that an asset loan is often a quicker and easier alternative to traditional loans, as you can use what you already own as collateral.
What is collateral?
To secure an asset loan, you will be asked to provide collateral or surety for the loan. This can be anything you own that has a cash value, including your vehicle, property, jewellery, or equipment. The lender will value your asset and borrow you an amount in accordance to its worth. Your asset will be taken and stored in a safe place until you have repaid the loan.
Types of asset loans
Moveable asset loan
This is probably the most common type of asset loan. At its most basic, a moveable asset is anything that can be moved and includes items such as luxury watches, gold, diamonds, antiques, and artwork.
Car pawn loan
You may choose to pawn your car for cash to cover large expenses or to get on top of your bills. As long as you own your car outright, you can use it as collateral. It is important to note that you won’t be able to use your car while it is pawned.
If you own a company, closed corporation, or trust with three or more trustees you will be able to take out an asset loan against a property. The property needs to be unencumbered, in other words, it should already be paid in full.
An asset loan is a convenient and flexible way to get cash in hand quickly. We recommend that you find out as much as you can before making any financial decision.0