The pros and cons of an asset loan

The pros and cons of an asset loan

An asset loan is a loan based on the equity you have in an asset. If you have a fully paid off car for example, you can get an asset loan based on the vehicles trade-in value. These are typically called car pawn loans. Asset loans however are not restricted to motor vehicles. Assets may include jewelry, art and memorabilia etc.

The up-side of securing an asset loan is obviously quick access to cash. The entire loan process is typically thirty minutes or less. You also do not need to go through the same credit screening as you would when applying for a bank loan. An asset loan also does not affect your credit score. For an example of a good asset loan company visit Car Pawn Loan for more information.

The down-side of an asset loan however is the possibility of losing the asset you have put up for collateral. Should you not be able to repay the loan in the time period you agreed upon, the loan company has the legal right to sell the asset to recover their costs. Another down-side of an asset loan is the higher interest rate you will pay for the loan, typically around the twenty percent mark. The loan period is also typically thirty days, but longer terms can be negotiated.

If you are in a position where an asset loan is right for you then it is highly recommended you do a little comparison shopping. Don’t just walk into the first lender and accept their terms. Compare lenders and get the best interest rate and asset evaluation you can, if a lender senses you are desperate, chances are the loan terms are going to favour him. Do a quick Google search for lenders in your area, you can expect to find four or five in pretty close proximity.