Applying for a loan is one way to purchase high valued properties. However, most banks will finance a purchase if there is a collateral. Know the different types of loan collateral that you can use.
What is Collateral Loan
It is a type of money borrowing wherein a certain commodity or property with value is given as a collateral. Banks that lend money to borrowers need to have sense of security in the event the that borrower is not able to pay for the capital and interest.
Types of Collateral for Loan
In most cases, properties are used to apply for a loan collateral. You may use any but not limited to the following items:
Lot
House and Lot
Car
Equipment
Cash Security
Inventory
Banks with Collateral
Most banks will signify the property to become a collateral when you apply for a loan. If you have good credit score and profile, you may be able to get approved.
However, the property that you are paying for from the borrowed money may be repossessed. Here is a list of banks in the Philippines to apply for a loan with collateral:
BDO
BPI
Security Bank
PNB
PSBank
Metrobank
Chinabank
Home Loan
Buying a house or even a vacant lot may be applied with a specific loan from banks. These properties will also serve as collateral if you are not able to fulfill payment at an agreed time frame.
Auto Loan
In terms of car loan, the car itself will be the collateral and it may be repossessed b y the bank if the borrower is not able to pay the loan usually for 60 months.
Interest Rates for Loan with Collateral
In some cases, the loan interest rate with collateral may start from 20% to 35% per year. The monthly add one rate may be different if you are applying for a personal or business loan.
For those with business, the inventory or equipment may serve as collateral.