Most people require loans to supplement their income or to pay for an immediate expense that has caught them by surprise. However, lenders don’t offer loans without security, and they would request the borrower to submit various documents for verification before they can decide to provide you with loans. Besides providing the materials, the lender may require you to give collateral for the credit given such that, in case you default, the guarantee will be sold to pay back the loan. Here are some of the insurances that people provide for loans and the type of loan they get.
- Land Title
Land title is one of the items that you need to produce so that the lender can agree to offer you the amount of the loan you are requesting. For the land title, you can get a significant amount of loan that sometimes amounts to the market value of the land. The amount of money you can borrow against land title is far higher than cash loans that you get from shylocks after providing a small asset as collateral. Those people who use land titles are bound to get a lot of money because the land is known to appreciate in value and the lender is assured that in case of default, the value of the property will pay back the loan.
- Company Shares
Units of ownership have for a long time been used as collaterals when individuals want to acquire loans. If you have a significant number of shares in a particular company, you can easily use the certificate of ownership to secure a loan from a lending institution. Before getting the necessary loans, you must submit any document that shows all the shares belong to you and that you are willing to use them as collaterals. Although you will be receiving dividends associated with the shares, you will not be able to transfer the ownership of those shares because a third party already controls them. In case you fail to honor your loan repayment, the lender assumes the ownership of the shares and has the right to transfer them to the third party.
- 401 (K) Assets
People don’t know that they can use their 401 (K) to fund their trip and see some of the most amazing views in Africa. The receiving body classifies these types of contributions as assets. Given that they fall under any class of investment, you can use them to acquire a loan from one of the mainstream lenders in the financial industry. The only thing required from you is that you have to submit a proof of ownership of such assets and your contribution must be up to date. However, the amount of money you get regarding the loan cannot exceed your total 401 (K) contributions.
- Car Logbook
Using a car logbook to secure loans is a common practice in the loan industry. The lending institution is just interested in verifying and proving the original owner of the car. If you are the owner of the vehicle, you will be able to access any loan from the lending institution. However, your car must be well maintained and not too old. This prevents a situation where the vehicle may lack a resale value. Remember the lender wants to have something that he can sell to acquire his money. Using a car, you can access different types of loans such as mortgage loans, personal loans, and even business loans. The problem is that there is a limit to the amount you get as you cannot get more than the worth of your car.
- Personal Income/Standing Order
The most significant number of people who have to acquire loans from the banks use their income as the collateral to the loan. Given that your income is deposited in the bank, the bank will be obligated to deduct an agreed installment until the full amount of the loan has been paid. You can use your income as collateral to acquire loans to buy a car and avoid public transit, or fund other expenses.
Before accepting all the forms of collateral highlighted above, a lending institution is obligated to check for ownership upon which the loans will be approved, if you justify that you own all the collateral. Sometimes your spouse will be consulted, especially when using health insurance or a house as collateral for a loan.