When you are short on cash, one option that you may explore is taking out a loan. If you own valuable jewelry, one loan alternative that you can utilize is a jewelry-based collateral loan. The lender will evaluate your jewelry before deciding how much to lend you. Your lender will then hold your jewelry until you pay the loan off in full.
Should you neglect to pay your loan off, the lender retains ownership of the jewelry and can sell it to recover the balance of your loan. Here are a few details you need to know about jewelry-based collateral loans.
1. Lenders Accept Multiple Types of Jewelry as Collateral
One of the most common misconceptions about jewelry-based collateral loans is that lenders will only accept luxury jewelry items. Though lenders will take certainly these pieces, they will also issue loans on less expensive pieces of jewelry.
If you have jewelry that has real gold, silver, or gemstones, you may be able to use it to get a loan. Many lenders also take watches as collateral. When in doubt, bring the item in and see what the lender offers.
2. Interest Rates for Jewelry-Based Collateral Loans Depend on the Item's Value and State Regulations
Unlike a conventional loan, jewelry-based collateral loans do not take your credit score or income into account when deciding what interest rate to offer you. Instead, the interest rate depends on how much you want to borrow and the amount that the lender values your jewelry at.
Some states also have regulations that dictate the interest rate that jewelry-based lenders may charge.
3. You Can Pay Your Loan Off Early
Perhaps you miss wearing your jewelry, or maybe your financial situation changes and you receive an unexpected influx of cash. If you want to pay your loan off before it matures, it is acceptable to do so. Your lender will not charge you any prepayment fees or penalties for paying the loan off ahead of schedule.
4. Your Lender Can Fund Your Loan the Same Day You Bring in Your Jewelry
An advantage of a jewelry-based collateral loan is that the lender makes a decision regarding your loan the same day you bring in your jewelry. You don't have to fill out a lengthy application and wait for the lender to check your credit history or verify your employment. Once the lender has valued your jewelry, you can sign the paperwork for the loan and receive your funds. The process is quick and easy when compared to the application procedures for other loans.
For more information on loans in your area, contact your local experts.