Among the items Borro.com has taken in as collateral for a personal asset loan is this Andy Warhol print of Moa and a Fender Telecaster guitar.
For owners of high-end art, antiques, collectibles, jewelry and even luxury automobiles in need of fast cash, there is now a way to tap into some of those items’ value without having sell or auction it. Borro.com enables its clients to use their personal assets—the aforementioned antiques and such—to secure a loan quickly and quietly.
Tom McDermott, the General Manager of Borro USA, says that the type of items that have been used to secure loans have run the gamut from sports memorabilia, like World Series rings and Olympic medals to movie memorabilia and everything in between.
“We’ve had an Academy Award from the family of the Oscar winner, the leather jacket Steve McQueen wore in the movie ‘Bullitt’ to Harry Winston-designed ruby and diamond earrings,” McDermott said. “We’ve even had Lamborghinis and Maseratis.”
Borro.com will loan up to 50 percent of the value of luxury cars—like this Aston Martin Vanquish 2—in as little as 24 hours.
The main three reasons that clients come to Borro, says McDermott, is that first and foremost, “we are fast. We can turn around the transaction in 24 to 72 hours. Second, we are discrete and private. We don’t do credit checks and only do research on the asset itself. It’s a value; the client gets a loan immediately and then gets the asset back at the end of the loan.”
McDermott says that the terms are pretty basic, as is the amount of money one can get from an asset—anywhere from $1,000 to $1,000,000. For example, he said, suppose that someone had a small painting by French Impressionist Edgar Degas. The process of putting the item up as collateral for an asset loan would begin with a valuation of the piece’s worth.
“You can send us information about the item so we can understand its approximate value,” McDermott said. “We have an internal group of valuation specialists who will value it. Based on the information the client provides, we will come up with a value and lend up to 50 percent for art, antiques and things like cars. We will lend up to 70 percent on jewelry, gold and watches.”
The turnaround is fairly fast, too, as jewelry loans can be qualified in 24 hours, with 48 hours needed for cars and 72 hours or art and collectibles.
The length of the loan is six months (with no early repayment penalty), at which time the loan and interest must be repaid. The item will be held by Borro until then. You can drop the item off at Borro, have it delivered or Borro will come to you the client to pick up the item.
McDermott says the default rate is very low, as Borro will work with clients to find a solution if they are unable to repay the loan immediately.
“After six months, you can extend the loan, after paying the interest, for another 6 months,” said McDermott. “If you can’t pay it at all, we will work with you to pay at least the interest for another four to six weeks. If the client must default, the asset becomes Borro’s, they will immediately liquidate the item through sale or auction to pay off the loan. Once the loan is paid, any extra money goes back to the borrower.”
Personal asset loans on jewelry and watches, like this Audemars Piguet, can be transacted in 24 hours.
“The higher the value of the asset, the lower the default rate,” McDermott said. “Usually, if a client owns something worth $100,000-$200,000, they want to keep it and will find a way to get it back. About 90 percent of our loans are redeemed.
Borro, whose sole U.S. office is on Third Avenue between 47th and 48th Streets in Midtown Manhattan, has been in business in the United Kingdom for five years and is in its third year here in the U.S.
A new product Borro has recently introduced is a sale-advance on an item that is to be sold. If the client wants to sell an item, Borro will provide a loan immediately and then put item into a channel to sell it, usually through an auction.
“We’ll come up with a price we think it will go for and with a reserve price and then loan up to 70 percent of the reserve price,” McDermott said. “And at the end of the transaction, we would take our principal and fees (roughly the same as the auction house), and the client receives the rest.
“Some people want that privacy. They don’t want it to be known that they are selling an item at auction, so we put the item up under our name to keep the transaction private,” McDermott said.
Gregory Watkins is the executive editor of WorthPoint. You can e-mail him at email@example.com“>firstname.lastname@example.org
WorthPoint—Discover Your Hidden Wealth