There are all kinds of reasons that people take out loans, from managing unexpected expenses to starting new businesses to investing in real estate. Today, we are taking a closer look at the many motivators that prompt people to explore borrowing money.
Of course, not all loans are created equal. Personal loans can be an attractive option for some borrowers, but if you are looking for low interest rates and high loan amounts, a traditional personal loan can fall short. Enter, asset loans, the little-known alternative to standard lending options that can completely overhaul your liquidity and financial flexibility.
Our team at AMETA Finance Group is here to give you the inside scoop on how asset loans work and a glimpse into the many different ways that you can use your loan funds. The only question remaining is, which of your valuable assets will you put to work?
How Do Asset Loans Work?
To help our clients truly understand the benefits of asset loans, we like to compare them to traditional personal loans. A standard personal loan is one that you might access through your bank or another standard financial institution. Typically, that lender will assess your income (demonstrated through tax documentation or pay stubs) and check your credit to determine how much money you are eligible to borrow and what interest rate they will offer.
Generally speaking, personal loans are capped at about $50,000. They also offer variable interest rates, which depend on your credit score and other factors. For those with excellent credit (a score above 720), the average interest rate for a personal loan is 11.81%. But for those with poor credit (a score below 629), the average interest rate is 21.65%. Such high interest rates can feel punishing and even prohibitive to many borrowers.
This is where asset lending comes into play. For those who are not satisfied with their personal loan options, asset lending offers a number of key benefits:
- Higher loan amounts (at AMETA, we offer asset loans of up to $5 million)
- Lower interest rates (our loans have competitive 4% APR rates)
- Quick turnaround times
- Competitive loan-to-value ratios between 60% and 80%
- No credit checks or proof of income
- Reduced administrative hurdles
- And much more!
Basically, asset loans allow you to borrow against the value of a high-end item that you already own. At AMETA Finance Group, we specialize in loans against luxury watches and fine diamond jewelry. That said, you can borrow against all kinds of different assets from lenders across the marketplace: fine art, antiques, vehicles, boats, real estate, and more.
You do not have to sell your valued possessions in order to access the liquidity you need. Instead, you simply leverage those items, borrowing a percentage of the piece’s appraised value. The lender holds onto the asset throughout the duration of the loan in case of default. Once you repay the loan in full, you receive the asset back in the very same condition you left it. Really, asset loans are a win-win situation.
Why Do People Take Out Asset Loans?
So, why do people decide to leverage their assets? There are countless reasons that a borrower might need an extra cash infusion or a bit more liquidity. Asset loans are an excellent tool when you need to harness additional financial flexibility to fund the opportunities and setbacks that life puts in your path. Here are just a few examples of reasons that people have taken out asset loans in the past.
Venture Capital and Angel Investments
Sometimes, opportunities come your way that you simply cannot pass up. Investing in an exciting new company as an angel investor or as part of a venture capital fund gives you the chance to get in on the ground floor of a burgeoning new business. But these types of investments also require a significant amount of liquidity: angel investors generally invest between $10,000 and $200,000 in a given startup. If you are looking to make a larger investment, you might need to borrow more than you could access via a personal loan. Yes, you will have to pay interest on the money you borrow. But if you invest smartly, you can earn that back no problem.
Building a Real Estate Portfolio
Real estate is another common place to invest using an asset loan. You can leverage an existing asset in order to get the capital you need to make a competitive offer and expand your real estate portfolio. You cannot always predict when the perfect property will come up for sale, so if you need liquidity quickly, an asset loan is a strong choice. Then, you can earn the money back by renting out the property or apartment complex.
Speaking of real estate, home improvement is another place that we see people directing their asset loan funds. Maybe your primary residence needs essential repairs, or many you are simply trying to bring an older home into the modern era. Either way, an asset loan could give you the flexibility you need to make the project exactly what you have been dreaming about.
Milestone Celebrations
Asset loans can provide an influx of cash for life’s big moments: think anniversary parties or vacations, weddings, sweet sixteen celebrations, and more. When you want to host a truly memorable celebration or make sure that someone feels extra special on their big day, an asset loan can go a long way in granting you the liquidity you need to make it happen.
Funding Educational Costs
The average cost of a college education in the United States continues to climb, currently averaging $44,961 per year for a four-year, private university. Whether you are paying for your own education or helping your child, friend, or someone else fund theirs, an asset loan can help you lock down the liquidity you need and avoid taking out higher-interest loans through the federal government to pay for an investment in the future.
Starting a Business
Starting your own business is an expensive endeavor, but when you are passionate about a product or service, it is a no-brainer. However, you will likely need some capital to get up and running. There are many options for borrowing when it comes to business applications, the most common being a loan through the Small Business Administration (SBA). However, SBA loans typically take between 30 and 90 days to fund. If you need cash faster than that, an asset loan can be the tool that unlocks real possibilities.
Unpredictable Expenses
Occasionally, life throws a curveball your way. When you are hit with unpredictable expenses, sometimes borrowing money is the best path to avoid late payment penalties and even going into collections. Maybe you need a roof repair on your home, maybe your car broke down, or maybe you are feeling buried under medical bills. Whatever your situation, an asset loan can give you the chance to get back on your feet again without the stress of debt collectors crowding your voicemail box and countless mailers reminding you how much you owe.
Consolidating Debt
Taking on more debt in order to pay off debt might sound a little bit silly, but the numbers stand strong behind this strategy. If you have a lot of high-interest debt, such as credit card debt, taking out a loan with a lower interest rate can help you reduce the burden of interest on your financial state. Borrowing money to consolidate debt can help you get your payments under control in one location with a manageable monthly payment and less interest. Asset loans have especially low interest rates, making them a good candidate for this use case.
Liquidity at a Moment’s Notice
All in all, asset loans offer quick liquidity that can help you navigate all of life’s ups and downs. Whether you are investing in the future or ensuring that the past does not overtake your finances, the flexibility of an asset loan might just be the answer you have been looking for. Here at AMETA Finance Group, we are here to help you navigate the borrowing process every step of the way. We are your trusted partner in all things collateral lending.
Build Long-Term Wealth With AMETA Finance Group
The moment that you take out a loan on your luxury watch or jewelry with our team at AMETA Finance Group, you are turning the page starting a new chapter of financial wellness and success. Our partnership with Manhattan’s elite jewelry and watch retailer Avi & Co. helps us make our appraisal process faster and more accurate than other lenders on the market.
Whether you are looking to leverage a diamond ring or borrow against a limited edition Rolex AMETA Finance Group is the place to turn for reliable and reputable collateral loans.
Reach out to our team today to kick off your asset loan journey.
