About Collateral Loan

Collateral is an asset pledged by a borrower to a lender, usually in return for a loan. The lender has the right to seize the collateral if the borrower defaults on the obligation. Collateral is security, which is why collateralized loans often receive better interest rates than unsecured loans, since the lender bears less risk.

Although mortgages are one of the most common collateralized obligations (with the house being the collateral), many other kinds of lending circumstances require collateral. For instance, margin loans almost always require collateral. Frequently the collateral is the securities involved in the margin loan.

However, the type and amount of collateral required for a given loan is often a matter of negotiation between the lender and borrower. For instance, a lender might require a borrower to pledge any assets purchased during the loan period as additional collateral. In some cases, collateral for one obligation can also be collateral for other obligations ( cross collaterals). This often occurs in real estate transactions, where a house collateralizes more than one mortgage.

Since the lender has security, they are more likely to give larger loans with a lower interest rate over a longer period. Collateral loans are an option when you want lower interest rates for a large loan, have poor credit, or are considering cutting debt costs.

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Collateral Loan Types

Here are types of collateral most lenders may accept for business loans: 

Property– some of the most commonly offered and accepted types of collateral are real estate property such as homes.

Cash Secured Loan-Cash secured loans are normally tied to certificates of deposits or savings accounts. You have to get the loan from the same lender that holds your CD so that he can place a freeze on that account. The freeze prevents you from accessing funds in the account until you have paid off the loan.

Inventory Financing-It is an asset backed, revolving line of credit or short term loan made to a retailer or a small entrepreneur or a SME so that it can purchase products for sale. Those products or inventory serves as collateral for the loan if the business doesn’t sell its products and cannot repay the loan.

Invoice Collateral-Invoice collateral is a way for businesses to borrow money against the amounts due from the customers. Invoice collateral helps businesses improve cash flow, pay employees and suppliers and reinvest in operations and growth earlier than they could if they had to wait until their customers paid them. Here borrowers pay a percentage of the invoice amount to the lender as a fee for borrowing the money. Invoice collateral can solve problems associated with customers taking along time to pay and difficulties obtaining other types of business credit.

We at Lenbor help you to finance slow paying accounts receivables or to meet short term liquidity.

Invoice financing benefits the lenders too because unlike extending a line of credit, which is unsecured and leaves little recourse if the business does not repay what it borrows, invoice acts as a collateral. The lender also limits its risk by not advancing 100% of the invoice amount to the borrower.

Blanket Liens-A blanket lien is a lien that gives the right to seize, in the event of nonpayment, all the assets serving as collateral owned by the borrower (debtor). A blanket lien gives the lender a legal interest in all of the borrower’s assets.

Others- it may include farm assets and products, insurance policies, paper investments and valuables such as fine art, jewelry or collectibles.

Collaterals may differ for the category of loan asked that is for personal loans persona; real estate, home equity, personal vehicles, paychecks, savings accounts, paper investments or other valuables such as fine art and jewelry.

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Features of Collateral Loan

All loans are not created equal, SMEloan has become a great option for people to use.

Faster Loan

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Choose your amount

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Enjoy the best rates

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Collateral Loan - Eligibility

Any salaried, self-employed or professional Public and Privat companies, Government sector employees including Public Sector is eligible for a personal loan.

Age

Maximum age of applicant at loan maturity: 60 years

Income

Minimum Net Monthly Income: Rs 15,000

Credit Rating

Applicant should have the bank specified credit score.

Frequently Ask Questions

If you have a question that deals with clients, customers or the public in general, there is bound to be a need for the FAQ page.

Yes. There is never a fee for making prepayments or paying your loan off early.

To pay off your loan or to see what your payoff amount is for a given date, Sign In to your Prosper account. You will see a line titled “Remaining balance”, which shows the entire amount due on your loan as of today. To see what your payoff amount is for a future date or to schedule a payment, simply select the “Pay off loan” link and choose the date you’d like to pay your loan off. The “Payoff amount” button will display the balance on your loan on the selected date. To schedule a payment select “Make an additional payment”.

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