If you are asset rich and cash poor, an interesting and uncommon option to getting quick cash is taking a loan against one or more of your luxury goods. Traditional loans typically have you put up assets such as homes, cars, or just your credit. An international lender known as Borro specializes in borrowers who put up luxury assets as collateral and doesn’t even do loans against homes. Luxury assets are often timepieces in the company’s experience, although Borro also works with other assets such as jewelry, art, wine and cars. What is most impressive is that Borro’s terms are pretty reasonable, given the unique nature of what they do.
Curious about the business, I spoke to Borro’s US General Manager Tom McDermott about who the company typically loans to and how it works. My first question was really “how is Borro different than a pawn shop?” In essence, they are similar, but Borro works on a larger scale with mostly higher-value goods. If you need quick cash for a low-worth asset, then going to a local pawn shop might be a good idea. However, if you want to borrow against a serious high-end luxury watch and want the most money for it, you need to work with a lender like Borro.
What I found interesting is that according to Borro, 50% or more of their clients are business owners or entrepreneurs. This helps explain the relatively fair loan terms, which are in most instances rather short-term, with an average length of 6 months. McDermott said that borrowers typically get 70-75% of the appraised value of their watch, with an interest rate of about 2.5% – 4% calculated monthly with no early payment penalties. That isn’t too bad, and clients go to Borro because most banks will not deal in specialized goods such as luxury watches as collateral for loans.
Borro clients tend to get cash wired to them in a few days, and the loan process seems speedy enough. Borro has offices in Los Angeles, New York, and London. Clients can either visit an office for faster service or work with them remotely and get a quick estimate on what their watches are worth for a loan. Clients then send the watches to Borro who promise a same-day value estimate for their clients.
Read the full article at Forbes.com