You might need a short-term loan for any number of reasons, from tiding your business over a rough patch to capitalizing on an unexpected opportunity. An asset-based loan is one that uses an asset, such as a valuable artwork, an item of jewellery or a car, as collateral.
This type of loan may suit you especially if:
• you have one or more valuable assets
• you need funds straight away
• you want the process of obtaining a loan to be completely confidential.
An asset-based loan is also an option if your credit record has some blemishes. These might prevent you from securing a bank loan. In the case of an asset-based loan, your credit history won’t be considered. Instead it’s simply the value of the asset used as collateral that secures the loan.
Case study: When an asset-based loan is the ideal choice
Consider the example of Stephen (name changed). Stephen owns a small export company that supplies wind chimes and antique, or aged, wooden frames to a number of retailers overseas.
He started the business almost a decade ago. Despite ups and downs, it has continued to provide valuable employment for a “family” of six full-time staff members.
A year ago, there was an unexpected (albeit temporary) strengthening in the rand. At the same time, the company was faced with unusually long delays in payment by two key clients. This left Stephen with a cash flow crisis. He needed to come up with some extra funds quickly, to pay staff salaries.
The options Stephen considered
Stephen considered applying for a bank loan. However, he was told that even if the application process went completely smoothly, the funds would reflect in his account only several weeks later. This would be too late. He needed the money soon.
Stephen wasn’t willing to approach his elderly mother or his sister’s family for money, knowing that they were all facing their own financial stresses.
Next Stephen’s thoughts turned to the limited edition Patek Philippe gold watch he was left by his father. Selling the watch could clearly buy his company much-needed time – but that would mean parting with a family heirloom of considerable sentimental and financial value.
The advantages of an asset-based loan
Stephen discussed his financial worries with a friend, who had recently made use of an asset-based loan himself and mentioned this as an option.
Stephen went ahead and applied for an asset-based loan, offering his watch as collateral. Within less than 24 hours, the needed funds were in his account and he was able to meet his company’s monthly costs.
The best part? To secure the funds, Stephen didn’t need to sell the watch. His company picked up as clients settled their invoices and, once Stephen had repaid the loan with the agreed interest, the watch was safely returned to him.
If an asset-based loan may be the answer to your short-term funding needs, contact Lamna for more information on 086 111 2866 or simply complete and submit our online application form. We take pride in offering loan services that are efficient, confidential and completely trustworthy.
Client borrows R10,000 for 90 days.
Total Cost of Loan
Fixed rates range from 36% to 60% APR and payment options range from minimum 3 to maximum 24 months. Apart from the initiation and monthly fees shown below, the only additional fee is credit life insurance if the borrower does not have this already.