A collateral loan can give you the cash you need to get through a financial rough patch. If you are using your jewelry for collateral, it is important that you are prepared for negotiating the loan amount with the lender. Here are some tips to keep in mind when using your jewelry for collateral.
Know the Jewelry's Worth
One of the most important steps you can take before negotiating with the lender is to find out the market value of your jewelry. Although you might have paid more for the jewelry, the lender is usually only interested in the market value of the piece.
Remember, the lender is taking a financial risk. If you are unable to pay off the terms of the loan, the lender will be tasked with selling the jewelry to recover what is owed to him or her.
Once you know the value of the jewelry, you can set a minimum price you are willing to accept for the loan. By doing this, you can avoid taking out a loan for less than you actually wanted.
Read the Entire Loan Agreement
Each lender sets their own loan terms. If you are not familiar with the terms of the lender you are considering, you could agree to a loan that you are unable to pay back in the allotted time. Before signing the agreement and turning over your jewelry, read the loan agreement. If you do not understand any of the terms, ask questions.
In the agreement, pay close attention to the interest rates, the length of the agreement, and whether or not there are additional fees to consider. For instance, the lender might allow an extension of the agreement if you pay an additional amount before the due date.
Be Prepared to Negotiate
The lender does not have a set loan amount that is used to determine how much is offered. When jewelry is taken to the lender, each piece is evaluated separately and an offer is made based on the value of that particular piece. You should view the offer from the lender as a starting point for negotiations.
Do not share the minimum amount you are willing to accept with the lender. You could be accepting far less than the lender was thinking of offering you. You should instead have a higher price point at which to start. The distance between the higher amount and your minimum can be your negotiation area.
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