Having a financial resource is imperative especially for medical expenses, educational fees, starting or expanding a business, and to provide the basic needs for survival. For some people getting pinjaman peribadi bank rakyat or personal loans and business loans from banks and other lending companies are then applied for to meet these financial needs.
For some individuals, selling their artworks or collection of artworks is one way to obtain this financial resource. But at times, selling and parting with artworks may sometimes be difficult because of its sentimental value.
People needing finance but would want to keep possession of their artworks or art collection can basically use them as loan collateral instead of selling them and parting with it forever. Art-backed loans are usually used to solve cash flow gaps in a business, to purchase more art, or to cover for unforeseen expenses. In the long run, many have availed of this loan because of its convenience and practicality.
How Does One Apply for an Art-Backed Loan?
There are banks and other lending companies who give loans that are secured or protected by assets that are of high-value. In general, here’s how the process of applying for a loan using your artwork as collateral:
- Browse your art collection and identify the art piece you would want to use as collateral for your loan. Aside from considering its monetary value, also take into consideration its emotional or sentimental value to you. Collateral loans may be risky, so choose a piece that has a high monetary value making sure that you are ready to let go and give it up in case you aren’t able to repay the loan.
- Have the piece appraised to find out its current market value and the amount of loan you get for it. Usually, a percentage of the appraised value is what you are allowed to borrow since determining the real market value of art piece may take a while. To make the appraisal process faster, bring with you any paperwork about the art piece.
- After the appraisal, an offer will be given to you and you will decide whether you take the loan or not. Aside from the loan amount, they will also be giving you the loan terms and conditions such as the period of time for payment, amortization, and interest rates. If you approve of the terms given, you can already sign the loan agreement and take the loan. If not, you can negotiate or look for other lenders for more options and possibilities.