If you’ve tried to apply for a personal secured loan, you might have had to offer collateral in exchange for it. If you’ve yet to apply for a loan, you may not know what it is. But what does collateral mean?
We’ll find out in a minute. First, let’s talk about personal loans and how the industry is expanding. Did you know that personal loans went up to $120 billion in 2018?
Getting a loan is one of the modern ways of survival. For some loans, the way to get money is to offer collateral. Below, we’ll explain what it is and if a comic book collector can use his collection as collateral.
In loaning, collateral is the term used for assets you use as security for payment of a debt. Some people use collaterals to secure the performance of a contract. Collateral is often one of the requirements in secured loans.
For example, you need to borrow money from a lender to pay for a new car. A lender for auto loans may use the new car or another vehicle as your collateral. If you aren’t able to pay the loan, the lender can take your collateral and resell it to recover his losses.
There are different types of collateral:
- Antiques and rare artifacts
- Collectibles and valuables
- Machinery and equipment
- Real estate
In the case of comic books, it would fall under collectibles. It’s in the same category as baseball cards, trading cards, sports memorabilia, postage stamps, and more. These items are often accepted as collateral for a personal loan.
If you want to read more about personal loans, click on the link to learn more.
Why Do Some Lenders Need Collateral and How Does It Work?
Now, we’ve answered the question, “what does collateral mean?” Let’s now take a look at why it’s important to lenders. As you can gather, not everyone pays their debts.
Lenders can’t bank on the promises of borrowers to pay them back. Some know from experience that it will only lead to losses. To solve that problem, they hold onto the borrower’s assets as collateral.
If the borrower decides not to pay, the lender can sell the collateral instead. This covers for his losses and ensures he doesn’t fall into a financial pit himself. With collateral, lending money to people isn’t so risky.
As you can see from the list above, assets used as collateral are often valuable. They have good enough market value. For some borrowers, the assets have great sentimental value.
With collateral to secure the loan, lenders feel more confident in offering larger amounts. If you offer the lender larger collateral, chances are you can get a larger loan amount too. Keep this in mind if you plan to borrow a large sum of cash.
Note that the loan is never more than the value of the asset used to secure the loan. This means you can’t get a $1,000 loan if you only offered collateral worth $800. If the borrower chooses not to pay, the lender still loses $200 in the end.
Which Comic Books Can I Use as Collateral?
If you’re a big collector of comic books, there’s a chance you can loan more than $1,000. Rare, valuable collectibles that count as collateral include rare and valuable comic books. Keep in mind that the comic books you offer as a collateral need to be in good condition too.
Vintage comics can be worth a lot of money. A comic book collection from the Golden Age of comics can be very valuable. You can even use comics that are part of a limited run.
You can find the true value of your comic books using several features. The best place to start is the age of the comic book and its print number. If it’s a limited edition, then it’s even better for you.
The popular characters in the comic book industry are also a deciding factor for its value. If it features a variant cover, it has a big chance of getting you a bigger loan amount.
Not all banks or money lenders know that comic books can be worth a lot. Most banks have a general lack of knowledge in specialized businesses. What you need is an appraiser who knows their worth.
Even you may not realize how valuable your comic books are. Are you worried that you won’t get your precious comic books back? Pay the debt on time.
Remember that you’re putting the asset at risk if you offer it as loan collateral. If you fail to repay the loan, you might as well say goodbye to the comic books. If you want to keep them, then don’t be late in repaying the loan.
Before you sign any contracts, make sure you give it a thorough read. It should specify when the lender will take the collateral and the process they need to follow to do it. Some lenders won’t even give advance notice before they sell or take your assets.
Do you feel that a lender isn’t offering you money equal to the worth of your comic books? You can always shop around for other lenders, too. Don’t be afraid to check the market and for how much each lender can offer you.
That’s it for our guide on comic books and collateral.
You now know the answer to “What does collateral mean and can it include comic books?” Now, you, as a comic book collector, know where to turn to if you’re ever in need of cash.
Why stop reading here? If you enjoyed the read and found it educational, you can also check out our other guides. Discover new tips today!