Would you secure a loan against fine wines or a watch?

By Helen Gradwell

People need a loan for many reasons - for example paying unexpected bills or just funding a well-earned holiday.

However, if you have a poor credit rating you may find it difficult to find a loan with an interest rate you can manage - or at all. It's also well known that securing a loan against a valuable asset - like your home - could make it easier to obtain (as the lender feels more confident that you will repay the loan to protect your asset).

But securing a loan against your home is a big commitment - because if you fall seriously behind on your repayments you risk repossession.

If you have a number of valuable assets - such as an expensive watch, fine wines, antiques or a luxury car - you could sell them in order to get a bit of extra cash. Many of these items have sentimental value, however - and some are irreplaceable. So how can you take advantage of the value of these assets whilst keeping them as your own?

Some lenders - like borro - allow you to take out loans secured against a valuable asset. Over the past two years, borro has seen a 122% rise in the average loan secured against watches. Other assets you can secure a loan against include gold, diamonds, jewellery and fine art.

As your loan is secured against something that is of great value to you, borro don't do credit checks and there aren't any early repayment fees.

Paul Aitken, CEO of borro, said: "It seems more and more people are looking to alternative sources of finance for accessing cash. Many people own valuable watches, not realising their true value. However, they could be reaping the benefits available from lending against assets like these."

An expert from All About Money added: "If you need a short-term loan, you could secure it against one of your valuable assets. It's really important to remember, however, that if you start to struggle with your repayments, you risk losing your asset altogether.

"Some things are replaceable, but if you lose a unique piece of artwork, a rare classic car or a piece of jewellery with sentimental value - like an engagement ring - it could be devastating. That's why you have to be sure that you can afford your repayments from the outset.

"If you don't like the idea of securing a loan against something incredibly valuable - or you don't have a fine wine collection or a luxury watch - a better way to find a loan may be to compare the available deals. Even if you have a bad credit rating there may be options open to you. Use a loan comparison service, or contact an expert if you're not sure."

Tags: loan, loans, loan application, secured loans, credit rating, poor credit, lenders, credit, unsecured loans, asset, borro

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