How to Secure a Loan With Personal Items

getting a loan with personal items

If you need money, and you own something of value, you may be wondering how you can secure a loan with your personal items. Most loans are secured by something, so it's important to understand how to do it and what it means for you. Here's some tips to get your started on securing a loan.

Things You'll Need

• Personal item of value
• Lender

Instructions

1. 

   First, it's important to understand what a secured loan is. Secured loans are when a bank, or other lender, offers to give you a loan but wants to hold something of yours as collateral. Lenders do this so they will have something to sell if you don't pay back the loan. What can be secured depends very much on the lender and their practices.

2. 

   One of the most common personal items to be secured for loans is a home. When you buy a new home and a bank loans you the money for the home, you are securing a personal item for that loan - the home. In this case, the bank allows you to use the home as long as you make payments, but they hold the title to the home until they have received payment in full. If you have a home that is paid for or a home that has a substantial amount of equity (meaning the home is worth more than you owe), it may be the best personal item to use for a secured loan.

3. 

   A car is another personal items that can be used to secure a loan. Just like with a home, when you purchase a car and a bank lends you money to pay for it, they allow you to use the car, but they hold the title until the car is paid for. It is more difficult to use a car that you own to secure a personal loan after the purchase, but it can be done. If you hold the title to you car, you can talk to your local bank or credit union about giving you a loan and using your car as collateral. They will then take title to your car and can have your car repossessed if you don't make your loan payments. They will also require you to carry full coverage insurance on the car. There are other lenders who will allow you to use your car to secure a personal loan, but those lenders will likely not loan you anything close to the full value of the car and will charge a high rate of interest for the loan.

4. 

   Pawn shops and other local lenders will often allow people to use personal items of value such as jewelry, electronics, appliances, furniture, etc. to secure a personal loan. Most of these types of lenders will require that they actually have the item in their possession during the duration of the loan. This means if you are using a diamond ring to secure the loan, you will have to give them the ring until you pay them back. If you don't pay off the loan in a certain amount of time, they have the right to sell it and keep any and all profits. These lenders will not give you anywhere close to the full value of the item you are using to secure the loan and will normally require payment in a short amount of time.

Tips & Warnings

• Many times using personal items to secure a loan, especially when you are securing personal items such as jewelry, furniture, electronics, etc, the terms of the loan are very much in favor of the person doing the lending. Decide carefully if your need for money is worth the amount of interest or other terms that they are proposing.