As a matter of course, lenders impose conditions on borrowers. For collateral loans in particular, the borrower must put up an asset or collateral as security. This is a guarantee in the event that the borrower fails to repay as agreed. Here are some questions you should ask when obtaining a collateral loan:
1. What can be used as collateral?
Several types of assets may be used as collateral. For example, motor vehicles, insurance policies and property. Remember though, a collateral loan is a secure facility. This means, in order to qualify, a guarantee covering the value of the loan is required. If the borrower fails to meet the repayment obligations, the lender may sell the collateral to recoup the loan amount.
2. How much can be borrowed?
The value of the loan is usually a percentage of the item being used as collateral. In most cases, borrowers can obtain a loan equivalent to 30% to 50% of the value of the collateral. In some cases, lenders will undertake their own valuations of certain items to determine their true worth.
3. How much will monthly repayments amount to?
Taking a loan with burdensome repayment terms is a recipe for defaulting. Your monthly repayment must be manageable and must fit in your budget. The period for the repayment of a collateral loan can range from as little as 30 days to as long as 12 months and in some cases even longer.
4. How costly are collateral loans?
In addition to paying back what is borrowed, borrowers will be required to pay the accrued interest. They may also be charged processing fees. It’s important to find out if there are any other hidden fees to prevent any surprise.
5. How soon after the application is the loan disbursed?
The period between application, approval and disbursement can vary. The process may be expedited, however, if the borrower has the appropriate documentation to prove ownership of the collateral to be used as security. The lender will also need time to undertake the necessary due diligence.
Need a collateral loan?
Are you looking for a collateral loan? Instant Auto Loans can help!
Instant Auto Loans is a family-owned and operated specialty lending institution offering vehicle title loans. For over 30 years, we have provided clients with courteous and confidential service.
At Instant Auto Loans, you can easily qualify for a loan using the equity in your car, truck, boat, motorcycle, or recreational vehicle. We do not require a credit check, and you will find that our interest rates are among the lowest in the short-term lending industry.
We believe in straightforward lending, so the rates and costs we quote are the ones you receive. We will never tack on hidden fees or require you to use unnecessary third-party hardware or services.
Access the best rates in Surrey and Burnaby. Give us a call today or apply online and have your loan processed in as little as 15 minutes.
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