A woman holding several 100 dollar bills she received from a collateral loan.
A collateral loan is a loan secured against an item you own, such as a valuable piece of jewelry or musical instrument.

Collateral Loans vs Other Types of Loans

At Best Collateral our customers often ask us the difference between collateral loans and other types of loans. Collateral loans are a type of secured loan. Read on for more information.

Secured vs Unsecured Loans

A loan is a financial instrument used to borrow money and then pay it back over time. There are two major types of loans – secured and unsecured.

An unsecured loan is the typical line of credit obtained through a credit card or a personal loan from a bank. It is unsecured because it is not taken out against any property or asset. Interest rates are typically higher on these types of loans because they are not secured against property, which the borrower could seize if the loan were not repaid.

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Loans secured against property are called secured loans–in which the borrower pledges an asset as collateral.

A mortgage loan is a type of secured loan. In a mortgage loan, someone borrows money to purchase property, such as a house or condo. A bank holds the lien on the title to the property until the mortgage is fully repaid. This is called a secured loan, because it is obtained using something of value.

Collateral Loans

Another type of secured loan is a collateral loan. A collateral loan is a loan secured against an item you own, such as a valuable piece of jewelry or musical instrument. They can be obtained more quickly than loans through financial institutions, and they do not affect your credit. Business owners have often used these loans to meet payroll demands and consumers have increasingly found them a good option in an era of tightened credit from banks.

If you need cash and have a item of value, contact us today. We have 11 locations in the San Francisco area that offer these types of loans.