What is Art Finance?
ART Finance is a financial service industry on the purchase and sale of works of art. Services include assessment of art, personal shopping services, art insurance, market research, curatorial services and secured artistic loans. Art Finance is also known as Art Advisory.
Art Finance Services are generally provided by private banks, auction houses and consulting companies. They are sold to top clients who are art collectors or sometimes directly to artists. Independent consulting firms in the field of artistic finance will advise clients about the purchase and sale of transactions, special investments, transfer of wealth and restructuring of art companies and collections. Financing art in the 80s has become an important sector because the popularity of investing in fine arts grew. Investments in art purely for financial profit have also increased, especially on the international scene.
The term Art Finance can mean the process of obtaining art by financing or practice of using the artificial works as bikesTereral in a loan known as an art loan. Artistic loans are often obtained by people who want to use an existing art collection to finance new purchases. They are also used for art owners who want to get cash to cover debt or art dealers who need funding to buy new works.
Sometimes artistic loans are structured as a reverse mortgage. This allows the art owner to accept monthly payments against the value of a work of art, instead of selling the work directly. This allows the owner to avoid paying tax on capital returns.
Art loans are a fine financial investment. Determination of absolute value for any piece of fine art is almost impossible. Many factors play in determining the value of the work of art. These factors can change dramatically over time, making money against art as a risky practice.
creditors can placeTit many provisions to an art credit document to reduce potential risk. The creditor may require a re -evaluation of the work of art used as a collateral at a certain point during the credit period. If the value of the work has decreased, the creditor may require more collateral or require a partial return of the loan.
In order to prevent the value of art, many creditors will not proceed more than half the value of the piece. Creditors will also often charge high interest rates on artistic loans, usually three to four points at the main interest rate. In some cases, interest rates can be up to 18%.