People have different reasons for applying for a loan. Some need extra cash to cover for emergency expenses, while others need it to fund home maintenance and repair. Some people wish to buy a house, and the only way to make their dream a reality is to apply for a mortgage. No matter your reason for seeking a loan, you’d want to get the best possible rates and terms.
To improve your chances of getting better monthly rates, interest fees, and loan terms, you can try putting up collateral. Borrowers pledge an asset with cash value. This will serve as your collateral that your lender can collect in case you fail to pay them back. But what types of assets do most lenders accept as collateral?
One of the most common assets borrowers use to secure a loan is real estate. You only need to bring along your real estate’s land title along with the other loan requirements so that your lender can check if you’re eligible for a loan. Mortgages allow you to buy a house by putting up a down payment and paying the monthly mortgage dues. Home equity loans, on the other hand, allow homeowners to borrow against their home’s equity.
If you have a car and need some extra cash and fast, you can apply for an auto equity title loans in Idaho. The great thing about title loans is that you have the chance to secure more cash than you can normally get with an ordinary loan. Of course, the amount you can borrow will depend on the value of your car. You can keep the vehicle and get the cash you need. There are also fewer credit checks associated with auto equity title loans, making it an easy way to secure a loan.
If you run a business and need additional funds, you have the option to use your equipment as collateral. But take note that lenders won’t accept all business equipment as collateral. Lenders won’t simply look at the price of your equipment. They will also take into consideration how saleable the equipment is and how fast its value depreciates. You’ll need to have a title of ownership for a lender to accept your equipment as collateral for a small business loan.
Did you know that you can use your future paycheck as collateral? Cash advance loans make it possible for employees to secure a loan with their collateral being their future paychecks. But one disadvantage of this is that you will need to pay your lender as soon as you get your next paycheck. If you’re facing a financial crisis and need a quick solution to your problem, then you can consider taking out a cash advance loan.
If you think your investments are only good in securing your financial future, then think again. You can also use some of your investment accounts to help you out in times of a sudden financial crisis. But lenders may consider only up to 50% of your investment portfolio. This is to increase their chances of getting their money back in case you fail to pay them off.
When it comes to using collateral, you can expect lenders to offer you a loan amount that is less than your asset’s value. Aside from the usual loan requirements, they will quote a loan-to-value (LTV) ratio. This will tell you how much of your asset you own compared to the amount you owe. If you decide to use any of your assets as collateral to a loan, recognize the risks and consider your capability of repaying your lender.