An asset loan lets you use luxury assets (like watches, cars, jewellery and art) as collateral for a loan.
This pawning process is famously quicker, more discreet, and more flexible than some traditional finance options. But do you need a credit check or proof of income for an asset loan? Here’s everything you need to know.
Do I need proof of income for an asset loan?
When you apply for traditional loans (like a mortgage, credit card or bank loan), you’ll usually have to go through income verification to prove you can cover the repayments.
Asset loans secure the funds using the asset itself, meaning you can be accepted without providing proof of income.
This makes it a viable route to finance if you don’t have a regular income stream (but do own some luxury items!)
Do I need a credit check for an asset loan?
While traditional banks demand lengthy credit checks, asset-backed lenders will usually pay out without credit or background checks – although you will need a form of ID.
Loans are based on the value of your asset(s) rather than your creditworthiness. It’s handy if you have a rocky credit history, or if you’re just looking for a discreet service that won’t leave an imprint on your records.
What to know: Risks and considerations with this type of pawnbroking
Before you borrow from any source, it’s important to be aware of any potential risks and downsides.
Here’s what you need to know about asset-backed loans:
- Like traditional loans, asset loans come with interest rates, which can vary depending on your lender and the type of collateral you’re using
- There’s a risk of asset depreciation. If the value of your asset declines during the loan term, you could owe more than it’s worth
- You risk losing your asset if you can’t pay the loan
- You should thoroughly understand the individual lender’s payment terms before signing up for an asset loan