Luxury Asset Loan vs Taking a Bank Loan: What You Should Know
Amid the pandemic and massive economic churn, people around the world are grappling with layoffs, pay cuts, and a drop in savings. Close to 30 percent of Americans had to stop saving for retirement over the past few months to free up liquid cash.
Even as the economy is getting back on its feet, people are struggling to regain control over their finances and get their business up and running. The liquidity crunch is the biggest reason that people are opting for loans. However, choosing the right borrowing product that best meets your requirements is extremely important.
Everyone’s familiar with personal and business loans from the bank. They offer optimal interest rates, but it can be tough to get one in the current environment. Loan approval takes time, which you might not be able to afford if you’re facing a liquidity crunch. Moreover, approval standards are stiffer than ever because of the number of people trying to get loans approved.
What about luxury assets and gold loans? How do they compare with personal loans? How can you tell if a luxury asset or gold loan is the right option for you? In this piece, we’ll take a closer look at both options.
What Do Luxury Asset Loans and Gold Loans Have in Common
Luxury asset loans and gold loans both have a lot in common: they depend on the value of the collateral you provide. In case of a luxury asset loan, this is a personal asset like a designer watch or a vintage car. When it comes to gold loans, it depends on the assay value of your gold, plus any in-set gemstones. Vasco provided a 100 percent free assay estimation to give you a clear picture of how much your gold or luxury asset is worth.
Compared to personal loans, luxury assets and gold loans offer significantly shorter processing time. Because they’re secured loans, the acceptance rate is also higher than for personal loans.
There are tradeoffs, too, which we’ll get to shortly: At the end of the day, the choice between a luxury asset/gold loan and a personal loan boils down to your needs as a borrower and your financial profile.
Right now, securing liquidity and working capital to keep things running is the biggest need for businesses and individuals, regardless of factors like your credit score, and with the fastest possible processing time in mind.
If that’s your use case, gold loans offer the best value. However, they aren’t without their limitations. Let’s look now at how gold loans and personal loans stack up to each other in terms of processing time, credit score impact, interest rates, and loan volumes.
Processing Times of Luxury Asset Loans vs. Personal Loans
A luxury asset loan is a secured loan, with collateral (your gold jewelry, luxury vehicle, or bullion). The collateral limits the financier’s risk, which means less time spent on approval and disbursal: You will get cash on hand a lot faster when taking a luxury asset loan as compared to a personal loan, where a lot more time is spent on verification.
Whether you’re taking a luxury asset loan or a personal or business loan, you’ll just need to have a valid government ID on hand.
Once everything is in place, asset loans are processed substantially faster than personal loans: payment is given on the spot. Personal loans, on the other hand, can take 2-7 business days, at the minimum, to get credited. The time delay depends on a lot of factors including the following:
- The loan amount
- Your credit history
- Bank Statements
- Other Related Documents.
Your documents have to be verified post-submission, which adds to the disbursal time.
Many banks, however, have started offering online approval facilities which makes the process a little faster and more convenient. However, if you’re looking for fast cash on hand, luxury asset loans remain the best option.
Credit Score Impact of Loan Types
Banks look at a number of eligibility factors when deciding to offer a personal loan. Your credit score plays a big role here: if you had issues with your score in the past, you might not get the best interest rates or terms. Banks often initiate “hard” credit pulls when you apply for credit or a loan. Even if you don’t end up taking a loan, hard pulls will temporarily hit your credit score: just shopping around for a bank loan can make it harder to get a bank loan.
Your credit score does NOT play a role when getting a Vasco luxury asset loan. That’s because the loans are secured against gold or some other item with a high principal amount, relative to the gold or luxury asset value. The key eligibility factor is that you have an asset on hand. Lenders won’t check your credit history or credit score. Moreover, luxury asset loans don’t require you to declare your current debt obligations. All of this adds up, leading to a smoother processing experience, fewer for businesses and individuals, hoops to jump through, and immediate disbursal.
Comparing Interest Rates of Asset Backed Loans vs. Bank Loans
Interest rates on personal loans and collateral asset based loans vary based on the length of the loan, repayment options, and the principal.
At Vasco our general rule of thumb is that your luxury asset loan interest rate will be a bit higher than bank interest, but lower than your credit card rate. This makes gold loans a great option if you’re looking for liquidity to secure your lifestyle or business in the medium term: the cost of financing isn’t that much higher than a personal loan, while processing time and availability are significantly better.
Loan Amounts Comparison
The principal for personal loans ranges between $1000 – $100,000 or more. When it comes to luxury asset loans, however, your principal depends on the value of the asset you pledge as collateral. The loan amount scales with the value of your collateral. This makes Vasco luxury asset loans a great gap financing option. When the amount you get from a personal loan falls just a bit short of what you need, a gold loan secured with some or your gold or a luxury asset can help make up the difference.
A personal loan or a luxury asset loan? Which one’s right for you? In the current environment, it’s tough for most people to get personal bank loans within an acceptable time frame, and with favorable repayment terms. You want cash on hand, with minimal processing, and fair interest and repayment terms.
Vasco’s collateral loans offer the best of both worlds. We offer rapid access to cash – you can book an appointment, drop by, and walk out with cash or a check on hand. And because your loans are secured by gold or other collateral, our interest rates aren’t much higher than a personal loan.
If you’re looking to make the next few months count, if you’re looking to rebuild and need that extra bit of support, reach out to us today. We’ll set you up with a free gold valuation and get the ball rolling on your Vasco luxury asset loan.