If your collateral loan application with IDFC FIRST Bank is approved, the loan amount reaches your account within hours. Depending on the financial institution, the loan amount may take hours or a few days to arrive in your account. Once the application is processed, you will receive the funds in your bank account. Submit a formal application: Submit your loan application with the requested details of your collateral.Collect the supporting documents: Be prepared with all the documents requested by the lender before submitting your loan application.You can check out IDFC FIRST Bank's loan offerings here. Doing so can help you find the best deal and save money. Compare secured loans from various lenders: After applying for prequalification with multiple lenders, compare their offers, including lender fees.The higher your credit score, the easier it is for you to get a collateral loan. Check your credit score: Before applying for any loan, you must check your credit score.Sovereign gold bonds can also be used as collateral to avail of a collateral loan from a bank or an NBFC.įollow these steps to apply for a collateral loan: It includes stocks, bonds, and mutual funds. Personal investments: Your personal investments can also be pledged as collateral.Your home or a piece of land is worth a significant amount, and financial institutions can use it to secure themselves and offer a loan. Land or property: Real estate is the most common form of collateral.In addition to gold, other valuable articles, such as antiques and fine art, can also be used to secure loans. Hence, gold coins, bars, and jewellery can be pledged as collateral. Gold and other valuables: Gold is valuable, so it qualifies as security for collateral loans.In some cases, a lender might require a borrower to transfer the physical possession of the movable asset to get a collateral loan. Collateral loans are provided against movable assets that hold a resale value. Vehicles: A vehicle or machinery is considered a movable asset.What can be pledged as collateral?Ĭollateral loans allow you to pledge the following assets as security: Having collateral protects lenders’ interest, as they can sell the asset to make up for their loss due to non-repayment of a loan. Despite having a good CIBIL score, often, borrowers may fail to repay their loans. That investor now owns 10% of the company and has a voice in all business decisions going forward.Why do financial institutions ask for collateral?Ĭollaterals make loans more secure for a financial institution. The owner decides to give up 10% of ownership in the company and sell it to an investor in return for capital. For example, the owner of Company ABC might need to raise capital to fund business expansion. The main advantage of debt financing is that a business owner does not give up any control of the business as they do with equity financing.Įquity financing involves selling a portion of a company's equity in return for capital.
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