When you need liquidity in a timely manner, it can be tempting to turn to tried and true assets to unlock your financial possibilities. Maybe you have a collection of fine diamond jewelry that has been passed down in your family for generations. Sure, it has sentimental value, but that sentimental value does not pay the bills. You would be sad to part with these family heirlooms, but needs must, right? If only there was a better way.
If this sounds like your situation, we have good news for you: There is a better way. It is possible to access the value tied up in your assets without selling them. The answer you have been looking for is called collateral lending.
Today, we are going to discuss the ins and outs of collateral lending, paying special attention to how it can help you maximize the value of your jewelry collection without selling off your cherished pieces. By the time you are finished reading, we hope that you feel informed, empowered, and ready to begin your collateral lending journey.
Here at AMETA Finance Group, we specialize in collateral loans against luxury watches and fine diamond jewelry. Our competitive terms are some of the best on the market, but you do not have to take our word for it. We encourage you to do your own research as well, and this article is a great place to start investigating the world of borrowing against valuable assets.
The Drawbacks of Selling Your Jewelry Collection
Some people wonder, Would selling my jewelry collection be an easier option? The mechanics of selling valuable pieces are pretty easy to understand: you exchange your diamond jewelry for cash, and the transaction is complete. Simple, right?
Selling your jewelry is simple, but it is often not the best choice for your financial future or your emotional attachment to your valuable jewelry. High-end jewelry and luxury watches often have sentimental value attached to them: perhaps you received your first Rolex from your grandfather upon graduating from college. Or maybe your diamond necklace is the same one your mother and grandmother wore on their wedding days. You only hope your daughter will wear it on hers, too. But of course, that will not be possible if you offload it entirely.
Here are a few of the concerns that might come up if you are thinking about selling your jewelry:
- Sentimental Loss: For many people, the sentimental loss of selling jewelry or watches is the biggest one. Your special connection to that piece will be gone forever, and you can no longer pass it down to future generations or give it to someone special.
- Investment Potential: Often, luxury watches and jewelry actually increase in value over time. That means that if you sell off your fine diamond jewelry, you could be missing out on the chance to earn more money on it in the future. It is always better to give these assets plenty of time to mature and grow.
- One-Time Transaction: Selling your high-end assets is, obviously, a one-time transaction. Once you sell a piece, you will not get it back to sell again. On the contrary, borrowing against your assets is a strategy you can repeat over and over as needed.
- Everyday Wear: In addition to an item’s sentimental value, it also has everyday value. If you are regularly wearing this piece, you may end up needing to replace it or buy another one, which sinks some of the monetary benefit of selling it in the first place.
The Benefits of Borrowing Against Jewelry
Now, let us take a look at the other side of the coin: asset lending. Borrowing against your jewelry comes with a number of benefits that avoid the annoying drawbacks associated with selling your prized possessions. But first, we will quickly review how asset lending works.
The Basics of Asset Lending
Asset lending, also called collateral lending or secured lending, is a way to borrow against the value of assets that you already own. You do not have to sell anything. Instead, you will get your luxury assets appraised to determine their market value. Then, an asset lender will offer you a loan as a percentage of that market value.
Throughout the duration of the loan, the lender will hold onto your asset. This allows the lender to easily repossess the item if you default on the loan after a number of additional chances. Asset loans are beneficial to both lenders and borrowers. From the lender’s perspective, they mitigate risk, offering a more attractive lending option. For borrowers, that reduced risk translates to lower interest rates, higher loan amounts, and easier-to-access liquidity.
Comparing Asset Lending, Traditional Lending, and Selling
How does asset lending compare with traditional lending or selling off your jewelry? We have broken down the basics into a simple table:
What Jewelry Can I Borrow Against?
Now that you know a bit more about the process of obtaining an asset loan and why it is such an attractive option, you are probably wondering about what types of jewelry or accessories you can borrow against in this manner. The basic criteria is that your jewelry needs to be made from precious metals or gemstones. Beyond that, there are a few different lending tiers to look at.
Brand-Name Jewelry
If you are borrowing against jewelry from a well-known brand (think Van Cleef & Arpels, Tiffany & Co., Cartier, and others), you will likely be able to get a higher-dollar appraisal for your pieces. That is because these brand-name items trade at a different level on the secondary market. They are easier for lenders to resell and have more predictable pricing from secondary market buyers; there is always someone looking to take home a Tiffany & Co. bean necklace, a Cartier LOVE bracelet, or a pair of earrings with the classic Van Cleef & Arpels Moroccan motif.
These items are likely to be appraised for even more (thus opening doors for higher loan amounts) if you hold onto the original box and paperwork. Ease of verification and genuineness is everything here, for both lenders and potential future buyers.
GIA-Certified Diamonds
As we mentioned previously, paperwork goes a long way. If you have GIA certification paperwork for your diamonds, which demonstrates that they are naturally mined and delineates their quality and scoring measures, you will likely be able to get a higher (and faster) appraisal. The GIA, or Gemological Institute of America, grades diamonds on four scoring metrics:
- Cut: The shape and style into which the diamond is cut. Examples include round, emerald, Asscher, marquis, heart, oval, pear, and more.
- Color: The hue or tint of the diamond, which is rated from D (colorless) to Z (light yellow or brown). Fancy diamonds, which are more brightly colored, are described separately.
- Clarity: The level of purity based on inclusions (internal) and blemishes (external). It is rated on an 11-grade scale ranging from Flawless (FL) to Included (I3).
- Carat: The weight of the diamond, which generally corresponds to its size.
Component-Based Appraisals
If you do not have GIA paperwork or brand-name jewelry to borrow against, do not fret. You can still take out a loan against your jewelry, but the appraisal process will be slightly different. In this case, a collateral lender will likely appraise the components of the jewelry separately.
For example, if you bring in a diamond necklace made from 18K yellow gold and set with a number of precious stones, the lender will separately weigh the gold and the diamonds. The loan offer will be based on the market prices for the given ounces of gold and carats of diamonds. This is called “component-based pricing,” and it typically yields lower loan amounts than brand-name or GIA-certified jewelry. However, it is still a great option to keep your assets in your own possession and borrow against their value.
Access Collateral Loans in No Time With AMETA Finance Group
Are you ready to take out a loan on your fine diamond jewelry or high-end timepiece? Even if you are not 100% ready to commit, consider getting a free appraisal to determine the worth of your luxury timepiece. You might be surprised by how much money you could access with a high-end watch or diamond jewelry loan.
Our trusted team is your go-to destination when you are ready to borrow against your valuable watches and jewelry. We are here when you need us, whenever you are ready to make a change in your financial story.
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