Imagine you have to face a contingency and require a credit urgently; but since you already have another valid credit, it will be difficult to request one more. Or, it may be the case that you do not have a credit history and it is not possible for a financial institution to give you the amount you need.
What to do if they do not lend you the money? In those circumstances you can opt for a loan with collateral.
What is a credit with collateral?
It is the loan that is granted to you, leaving as ‘collateral’ a property of your property, which remains in the hands of the lender or creditor, during a certain period, as a guarantee of payment. At the end of the term, you can recover it, returning the borrowed amount plus interest and commissions to the creditor.
With whom can I apply for this type of credit?
The private pawnshops and the Private Assistance Institutions (IAP) are the ones indicated to request this type of loans. If you go for a pledge, it is VERY important that you verify if the institution is registered in the Public Registry of Pawn Houses before the Federal Consumer Attorney’s Office (Profeco).
How can I request a loan with collateral?
The process may vary depending on the institution you go to request, but in general it is as follows:
- You must submit is the article or to pawn and an official identification; Some pawnshops can request the invoice (contract, guarantee) of the pawn item and its accessories, if applicable.
- The pawn shop or assistance institution evaluates the value (and wear) of the item.
- Set an amount, which is equivalent to a percentage of the value of the item.
- If you agree with the amount, then you sign a contract that establishes the Total Annual Cost (CAT) and the conditions to carry out the recovery of the item (such as storage costs and insurance in case of theft or loss) .
- ATTENTION: Check if the VAT is included in the CAT.
- At the end of the term, you must go with the amount of money that was lent to you, plus the interest and expenses that were specified, to recover the item or pawned.
If on the specified date you do not have all the money to recover the “pledge or item under warranty”, you can request an “endorsement”, which consists of extending the payment term. To do this, you must pay at least the minimum costs of the expired period.
TIP: Before signing a pledge, check how many endorsements you are entitled to. In case you do not have enough money in the referendums to recover your assets, another option is to wait for the item to be put on sale and request a percentage of that transaction. Of course, in this case you will not recover the article either.