What are the loan collateral

Loans may be secured by a pledge, which is to deliver to the creditor a chattel, left on deposit until those have been canceled.

Although best known guarantee in the case of loans is the mortgage, the garment becomes more relevant every day, so it is essential to know all its characteristics and peculiarities establish it if necessary to secure payment of a loan.

Difference between the garment and the mortgage

In secured loans the borrower secures your payment with a specific item of property, so that the creditor can make the proceeds of the sale of said object at a judicial auction pays the debt, in preference to other lenders.

The most common secured loans are mortgages that have been established on a property such as a home or an office, for example. The pledge, however, is established on property, that is, money, jewelry, appliances or financial instruments, to name a few, which are more common to own a flat.

In the article good is to the lender or a third party appointed by mutual agreement, while mortgage loans the property remains in the possession of the debtor. In both cases remains property of the borrower and the creditor cannot use it or sell it until there is a default and the judge to allow its sale to repay debt.

When you use the garment

It is therefore a kind of deposit. The garment is very usual in the case of pawnshops and called pawnshops, providing money for deposits normally leave jewelry, appliances and the like. If the debtor does not pay off the loan within the agreed time, the good is sold at public auction.

Given the difficulties in providing housing as collateral, banks and savings banks have also started to offer car loans. In these cases, accepted as security for such loans certain liquid instruments, as would, plus time deposits, stocks, shares in investment funds or pension plans and similar rights.