What are the different types of collateral?
loan applicants are often obliged to provide loan securing; The property in which the applicant has interest can be assigned to the creditor if the debtor does not make payments. The collateral may be greater, less than or the same as the proposed amount of the loan, depending on the debtor's faith and the liquidity of the assets. Whatever values can be used as collateral if both sides of the loan or notes can agree on its value. Mattiable and intangible properties can be considered. Common types of tangible properties used as collateral are real estate, accessories, supplies and equipment for businesses. For individuals, it includes tangible property of real estate, jewelry and art and equivalents of cash such as stocks, annuity and life insurance value.
intangible products may or may not be easy to determine. Payment rights in Accounts, Leapels, Financial Tools and Legal judgments may be complicated by market changes, legal decisions or inability to liquidate the expectedthe property. Payment rights are rights to future payments for any reason, such as lottery winnings, residual earnings or rights to paying past invoices when they are collected by new business owners. Chattel paper presents documents that mediate interest in goods, either owned or rented. Financial tools often refer to investment financing of some type, such as cash markets, insurance contracts or associated assets.
legal judgments are the funds granted by the court. Expectations of claims imposed for injuries, medical illegality or violations are rarely acceptable forms of collateral. The collection of these claims is often very difficult for corporations and individuals.
Other intangible products are products that may have considerable value in the future, but currently have little value. Loans that offer this type of collateral often have afterthe time of partial ownership of a new enterprise rather than a note. Examples are software development, patents and inventions and new business or marketing concepts. These properties are associated with high risk return companies.
Potential debtors, when considering what collateral to offer to meet the loan request, must remember that creditors usually do not want property. Instead, they want to be repaid. The emphasis on request should therefore be the ability to generate sufficient cash flow to fulfill the loan obligation without having to proceed to costly and difficult steps to obtain and dispose of the collateral.