Personal Loans

Saturday, October 29, 2005

Personal Loan Collateral

The inclusion of collateral into a personal loan agreement serves to establish financial credibility for the borrower, and to ensure the lender that they can secure their funds in the event of borrower default. This added security often permits a greater maximum loan amount for the borrower, as well as permitting a lower APR (Annual Percentage Rate) during the repayment term.

A security agreement for collateral must be drafted during the secured personal loan application process. This agreement serves as a means for the lending agency to legally repossess the property if needed. In addition to the security agreement, a promissory note is also drafted as evidence of the loan, and contains guidelines for that particular loan such as interest rate, principal, late fees, and default terms.

Some of the actual property that is frequently eligible to serve as collateral includes the following:

Real Estate - A home, house, condominium, mobile home, land, acreage, farm, ranch, mansion, or other real estate.

Motorized Vehicles - A car, truck, SUV, motor boat, jetski, yacht, motorcycle, ATV, RV (Recreational Vehicle), tractor, or other vehicle.

Personal Property - Jewelry items, guns, valuable equipment, or other personal property.

Other Assets - Stock securities, equities, fixed income securities, U.S. treasury notes, mutual funds, bonds, or other financial assets.