If you're like most people, there is a good chance that in some point in time you will need a large amount of money to make a purchase. A lot of people don't have large amounts of cash available, so they may turn to getting a loan. While you can go to your bank or credit union to apply for an unsecured loan, if you own any valuable jewelry you may want to think about choosing a collateral loan instead. Collateral loans have several benefits, such as:
Easier to Qualify For
When you take out a collateral loan with one or more pieces of jewelry, the value of the jewelry secures the loan. Thus, since you have placed your jewelry up to serve as collateral, lenders will be more likely to provide you with a loan. You will be considered a lower risk to lend to, since the lender will have collateral; in the event that you default on your loan payments, the lender will be able to sell your jewelry to recoup the loan amount.
Credit History is Not an Issue
Collateral loans using jewelry can be especially beneficial for people who have no credit or a poor credit history. If you do not have good credit, you will have a difficult time finding a financial institution willing to lend you money. But with a collateral loan, credit scores rarely matter. Instead, the lender will look at the value of the jewelry that you are using as collateral, and then offer a loan based on that value.
Lower Interest Rates
One of the biggest advantages of a collateral loan is the fact that the interest rates are often a lot lower than those of unsecured loans. If you need to borrow a large sum of money, a substantially lower interest rate can possibly save you thousands of dollars over the term of the loan. In the long run, using jewelry as collateral when taking out a loan can make a lot of sense financially.
Employment is Not Required
If you want to take out an unsecured loan, a financial institution will want to know your current employment status, how long you have worked for your employer, and how much you are paid. If you have a spotty employment history or have only been working for your employer for a short amount of time, your loan application may be denied. This typically does not happen when you take out a collateral loan. Since a collateral loan is secured with your jewelry, your employment history and current status will not make a big difference.