Anyone looking for credit may come across an attractive alternative, secured loan. It is a modality that is becoming popular as one of the cheapest in the market. This is possible when evaluating options for individuals. Since interest rates are significantly lower than those charged when using overdrafts or credit cards, for example.
However, to understand whether this also applies to legal entities, it is necessary to analyze it a little more deeply and consider other variables.
The guaranteed loan receives this name, as it refers to a type of credit, in which the client transfers the possession of an asset as a payment guarantee to a financial institution.
This means that the original owner remains in possession of the property, and can enjoy the property, for example, being able to live in it, rent it or occupy it as a commercial point.
However, the name of the asset is linked to the institution, because if the installments are not paid on time, the financier can take it and use it to pay off the debt.
The process of encumbering collateral usually occurs through Good Finance mortgage, Good Finance mortgage, mortgage or pledge and lasts until the loan is fully repaid.
Although it involves the risk of losing an asset, the secured home loan is considered advantageous for both sides.
It is interesting for the financial institution to work with this modality, as the inclusion of an additional guarantee increases the chances of it to recover the loaned amount. That way, you can offer competitive interest to your customers.
In addition to having access to a wider range of rates, the borrower is able to capture higher amounts and installments over long periods.
Types of Guarantee
Most institutions that operate with this type of loan accept real estate and vehicles as collateral.
In Brazil, it is still not very common, but in some cases, it is possible to sell medical equipment, agricultural machinery, boats, airplanes, crops, livestock, investments, among others.
There is also the payroll loan, an aspect that uses income such as pensions, salaries, thirteenth and income tax refund.
The pledge operates on the same principle but focuses on jewelry, works of art and valuables.
How it works
The process of making a secured loan is much like any other credit transaction. It involves registration and credit analysis to check if the customer will be approved.
The main difference is in the issue of guarantee, which involves a few more steps, mainly in the legal and formal aspects.
For example, it is essential to conduct a face-to-face inspection of the property to verify the real conditions. Another common practice is the analysis of property registration, a document that is made available by Real Estate Registry Offices.
In addition, it is necessary to present supporting documents of ownership, which usually takes more work when the property has more than one owner.
The legal issue tends to make the process a little longer than for a non-collateral loan.
Is it worth doing for my company?
One of the points to assess whether this credit line is suitable for your company is to consider how the money raised will be used.
Some uses generate short-term benefits, such as working capital. By increasing inventories, the results of these resources become visible in a few days, be it an increase in sales or an increase in business continuity.
On the other hand, some investments generate returns from a long-term perspective. The construction of a new store usually takes months and until customers start to visit it, their average sales level will be below ideal for a long time.
An industry that buys an imported machine will have to wait months for the equipment to arrive and some more time to convince its current customers that its new product is of good quality.
Given these characteristics, it is recommended that short-term investments be financed with short-term resources. While long-term investments are financed by long lines so that the debt payment term is compatible with the time needed for the entrepreneur to reap the rewards of his investment.
Looking at it from the perspective of banks, the longer the term of a loan, the greater the risks involved. As a result, an alternative for companies looking for long-term investments to be able to finance themselves properly is by taking out a secured loan. In addition, lenders tend to provide more advantageous terms and rates for collateralized transactions.
It is also worth remembering that, from the customer’s perspective, including a guarantee can be the difference between having your transaction approved or disapproved at the bank, as this additional security can make all the difference in your loan application.