In this day and age, most loans are guaranteed with some kind of collateral simply because it improves the chances that the borrower will make payments on time so that he or she can get their stuff back. It also means that in the case that the borrower is unable to repay the loan, the lender at least receives some value out of the transaction. When attempting to build or rebuild your credit, you may have made a deposit for a loan or secured card or may have put up your house for a mortgage. However, these are just some of the traditional things that have been put up for collateral. There have been quite a few weird things used as an asset for a loan. Let’s take a look at the five weirdest things put up as collateral.
A recent trend has emerged in which pawnbrokers are allowing people to turn their expensive items in such as sunglasses, wallets, purses and other designer fare in exchange for a small, short-term loan. Of course, this make sense as many of these items are worth thousands of dollars. In fact, a Hermes bag is valued to be worth more and increase in value more than gold.
A pawnbroker based in London called Borro, is known to give out loans in exchange for rare items and is infamous for giving out loans of upward of $2 million. Some of these rare items have included a stamp collection for $126,000, Beatles memorabilia for $51,000 and a Fender guitar collection for $36,000.
A very strange loan deal was made by a Spanish bank in exchange for financing the Real Madrid soccer team. In exchange for financing the team, Real Madrid used Ricardo Izecson dos Santos Leite and Cristiano Ronaldo as collateral. The bank aided the team in financing both players’ acquisition, which totaled over $111 million. In the case that the bank went under or the team failed to pay, the players’ contracts would be given to the Central Bank of Europe.
One of the biggest assets that a company owns is its intellectual property. This is even more the case in the age of the Internet where information is considered to be incredibly important. In this regard, it makes sense that a patent would be able to be put up as collateral. However, the tricky part is determining the value of an idea. Perhaps because of this, there has only been one case where a patent was put up as collateral. A manufactured goods company was able to get a $125,000 loan in exchange for putting up five of their patents as collateral. Ironically, the company owners needed a loan to finance the suing of another company for alleged patent infringement. Although they luckily won, it would have been quite interesting if they didn’t.
Animals are actually quite commonly put up as collateral. In Louisiana, one lender that offers truck and car loans once took a cat as collateral. That being said, it wasn’t any ordinary house cat, but a purebred show cat. Additionally, race horses are often used as an asset for securing a loan. In fact, a winning thoroughbred can secure a loan worth thousands of dollars. In some cases, it is the horse itself put up as collateral and in other cases it is simply the breeding rights of the horse. Lastly, in Zimbabwe a small lender accepts cattle as a form of collateral. However, if the loan is not repaid within two years the cattle will be returned.