LuxLoc Vs. Conventional Lines of Credit: What You Should Know
California is home to 4.2 million small businesses, the highest in any state in the U.S. Employing close to half the state’s total employees – higher than the national average – small businesses are the proverbial engine that drives much of the economy of California. Beth was a proud owner of one such small business that employed around 25 loyal employees who had been her thick and thin.
But Beth knew that she was struggling. She had commitments from retailers she was supplying to but felt the pinch of a fast-drying cash flow. With a runway of fewer than two months and money not expected from her clients in another couple of months, she wondered how she would manage. She started looking for options to raise cash quickly. She approached a few financial institutions hoping to get a line of credit. An elastic line of credit would be perfect. It would allow her to draw as much money as she regularly required until her cash flow was restored to previous levels.
What is a Line of Credit?
A line of credit is a loan that allows a borrower to access a certain amount of money they can use as needed. The borrower can withdraw funds up to their credit limit and only need to pay interest on the borrowed amount.
A line of credit can be secured or unsecured and revolving or non-revolving. Revolving lines of credit, such as credit cards, allow the borrower to borrow funds again after they have been repaid, while non-revolving lines of credit, such as home equity lines of credit, do not.
LuxLoc: A line of Credit that Unlocks the Potential of Luxury Assets
When Beth decided on getting a secured line of credit due to its apparent advantages over an unsecured line of credit and other types of loans, she quickly learned that she would have to pledge a vital asset as security collateral. She realized most lenders asked for an asset such as commercial or private property, vehicles, business infrastructure, or investments like fixed deposits, stocks, and other financial assets.
LuxLoc, a unique financial product from the house of Vasco, allows you to avail yourself of the many advantages of a secured line of credit without pledging a vital asset. While LuxLoc is a short-term, asset-based line of credit, the asset to be pledged is not vital but valuable. There are some key differences between Luxloc and regular lines of credit.
Let us dig deeper to understand first how secured lines of credit work.
A credit limit is the maximum amount of money a lender will allow a borrower to borrow on your LuxLoc line of credit. It is the upper limit of the amount the borrower can access, and it is determined by the lender based on factors such as the borrower‘s credit score, income, and assets. A credit limit may also be referred to as a “credit line” or “borrowing limit.” The borrower needs to stay within their credit limit to maintain good credit standing and avoid penalties such as late fees or higher interest rates.
Secured and Unsecured Lines of Credit
A secured line of credit is backed by collateral, such as a home. If the borrower cannot repay the loan, the lender can seize the collateral to repay the debt. Because the lender has less risk in this type of loan, the interest rate on a secured line of credit is generally lower than that of an unsecured line of credit. Examples of secured lines of credit include a home equity line of credit (HELOC) and a car loan.
On the other hand, an unsecured line of credit is not backed by collateral. This means that the lender is taking on more risk, and as a result, the interest rate is typically higher than that of a secured line of credit. Examples of unsecured lines of credit include credit cards and personal lines of credit.
The main difference between a revolving and non-revolving line of credit is how the borrower can access and use the funds.
Revolving and Non-Revolving Lines of Credit
A revolving line of credit is a type of loan in which the borrower can borrow funds up to their credit limit and continue to borrow and repay funds as needed. The credit limit is continuously available as long as the account is in good standing and remains open. Credit cards and home equity lines of credit (HELOCs) are examples of revolving lines of credit.
On the other hand, a non-revolving line of credit is a type of loan in which the borrower is given a set amount of funds, and once those funds are used, the borrower cannot borrow more. This type of loan is only sometimes available to borrow from again, like revolving lines of credit, and once the funds are used, the borrower must wait until the loan is repaid before they can borrow again. Examples of non-revolving lines of credit include personal loans and term loans.
Advantages of a Line of Credit Against other Traditional Loans
There are several advantages of lines of credit like LuxLoc as a loan compared to other types of loans:
- Flexibility: Lines of credit allow borrowers to borrow as much or as little as they need when they need it. This can be useful for unexpected expenses or to take advantage of business opportunities.
- Low closing costs: Lines of credit generally have lower closing costs than other loans, such as mortgages or personal loans.
- Lower interest rate: The interest rate on a line of credit is usually lower than that of a credit card or personal loan.
- Revolving credit: With a line of credit, you can continue to borrow money as you pay it back; unlike a traditional loan, you have to reapply each time you need more money.
- Convenience: Lines of credit are easy to apply for, and the process is usually quicker than a traditional loan.
- Credit score: Lines of credit can help build a credit score if the borrower uses them responsibly.
- No prepayment penalty: Many lines of credit do not have prepayment penalties, which means you can pay off the balance early without incurring extra costs.
If a line of credit is such a fantastic product, what stops most people from availing of this type of loan for their financial needs?
Problems with Current Lines of Credit
There are several problems with currently available lines of credit:
- High-interest rate: Although the interest rate on a line of credit is usually lower than that of a credit card or personal loan, it can still be relatively high, especially if you have a variable interest rate. Some lines of credit have variable interest rates, which means the interest rate can change over time based on market conditions. This can make budgeting and repaying the loan more difficult.
- Fees: Some lines of credit may have fees associated with them, such as annual fees, origination fees, or transaction fees.
- Credit score: Many lenders require borrowers to have a high credit score (over 680, in most cases). You may have to bear a higher interest rate if you have a lower credit score. Also, since credit score becomes a statutory requirement, your credit score can be negatively affected if you don’t make payments on time or exceed your credit limit.
- Risk of asset loss: A secured line of credit is better than an unsecured one. Because the risk of the lender is reduced to a great extent, you may get excellent loan terms, including lower interest rates. However, as far as traditional lines of credit are concerned, you will have to pledge a valuable asset like your home, savings account, real estate you own, etc. If you cannot pay back the loan, you face the possibility of losing such a vital asset. This is the most significant risk and disadvantage of a traditional secured line of credit.
To get a LuxLoc line of credit you can pledge your luxury assets with ease.
Luxury assets are items most people hold – either bought or inherited – for sentimental purposes or for elevating our lifestyles. We inherit or buy jewelry, including wedding jewelry, engagement rings, or precious metals, including gold and silver coins, pieces of art like paintings and sculptures, designer watches and purses, exotic cars and bikes, yachts, and even jetliners. While all of these items have an inherent value – they were bought by paying money – we usually do not look at them from a monetization viewpoint.
LuxLoc helps you unlock the inherent value of these items to fulfill your financial objectives. By pledging any of these items as security collateral, you can avail yourself of all the benefits of a secured, revolving elastic line of credit.
The most significant advantage of LuxLoc was that you do not lose a vital asset like your home in the rare instance of a loan default. You can always repurchase your luxury asset when the time is right. This removes the stress of servicing the debt and puts your mind at ease.
What are the Advantages of LuxLoc over Regular Lines of Credit?
With LuxLoc, you get the lowest interest rates on your line of credit since your luxury asset backs it.
Flexible Loan Terms
With LuxLoc, you get 6- and 12-month terms. Plus, you can extend the terms indefinitely as long as you pay and are in good standing.
No Impact on Credit Score
LuxLoc neither requires your credit score nor has to send a credit report of the transaction to the Credit Bureau. This means that neither a bad credit score dampens your chances of getting LuxLoc nor does the transaction impact your credit score.
Lowered Entry Barrier
With the assets required to be pledged as collateral, this loan was previously available to asset-rich businesses and high-net-worth individuals. However, with loans starting at as low as $20,000, anyone with luxury assets worth that much can avail of LuxLoc.
The Best LTV in Town!
LuxLoc gives you an LTV ratio of 80%. You get an available credit limit of up to 80% of your asset. Plus, we give you the best value for your luxury assets.
Free Appraisal of Your Luxury Assets
When you come to us with your luxury items, we offer you a free, zero-obligation appraisal service through our extensive network of experts. Even though you may decide not to avail of any of our services, you still get a lot of valuable insights into your luxury assets.
No Hidden Fees
You should get more money to spend and charge only a small, one-time maintenance fee. There are no nasty surprises in the name of origination fees, cash advance fees, penalties, etc.
Easy Loan Applications and Fast Approvals
When you require cash, time is of the essence. You can get the money within 72 hours in your checking account with highly simplified documentation and application process.
How LuxLoc Helped a California Small Business
Beth was overjoyed when she heard about Vasco’s LuxLoc. She had bought a vintage Dodge Charger – a few years back. She decided to get valuations at Vasco’s offices. When she got the valuation report, she was pleasantly surprised.
After deciding the loan amount, interest rates, repayment, monthly payments, payment schedule, and loan terms, Beth signed on the dotted line. And within the next few days, she had the first tranche of money in her bank account. With her financial issues taken care of, Beth started deciding how to grow her business by onboarding more clients.
To know more about LuxLoc, visit us at 2024 Quail Street, Newport Beach, CA 92660, call us at 949.610.7774/800.688.2994, or write to us at firstname.lastname@example.org.