One of the easiest ways to be approved for a loan is to offer up some form of collateral. However, even with bad credit, this doesn't mean that a bank lender is going to approve a loan for you. So, when you're denied by the bank, where do you go? If you have something of value that you can use to "secure" your loan, such as an expensive piece of jewelry, you may want to consider finding a company in your area that will offer you a collateral-based loan. If you are considering this, here are a few things to keep in mind:
1. Make Sure You Can't Borrow the Money from Someone.
Before diving deep into loans, consider speaking to a family member or a trusted friend about borrowing the money from them. If they have it, they may be more than willing to let you borrow it. If they do, consider drawing up a basic, informal agreement that simply states the terms of the loan, including the amount of money that is borrowed, how the money will be repaid and the interest rate (if any). Yes, this may feel a bit awkward, but this is an important step that will help make the transaction a bit more official and help minimize the potential of any misunderstandings and unnecessary conflict down the road.
2. Understand the Risks Associated with These Loans.
If you must go with a collateral-backed loan, make sure that you fully understand the risks that are involved. For example, if you are offering your grandmother's diamond engagement ring up for collateral, you need to realize that you could lose the ring forever if you fail to make the payments as agreed with the company that you do business with. The same is true with the pearl necklace that your significant other gave you as a birthday present last year. While you may have every intention on repaying the loan, you never know what life obstacles may pop up along the way.
3. Get a Third-Party Appraisal Ahead of Time.
It isn't uncommon for the company lending you money to be a bit on the conservative side when it comes to putting a value on your assets (aka collateral). So, it may be in your best interest to consider having someone provide an appraisal of your jewelry before you go in. This way, if they try to low-ball you, you will have proof that the jewelry is worth much more. Keep in mind that you may not necessarily receive a loan of the exact value of your jewelry, as many companies will often only offer you a certain percentage of the value.
Contact companies like Sol's Jewelry & Loan to see how much they will loan you for your jewelry.