Lombard loan is a type of short-term loan. It is provided only against the security of the property of a person who wants to take out a loan. The property must be in demand and well sold in the consumer market. The collateral in this case requires high liquidity.
Every person may have financial difficulties when money is urgently needed, but there is nowhere to take it. In this case, you can resort to pawnshop lending, but only if the property has movable property that can be issued on bail.
The cost of the collateral must necessarily cover the principal amount of the debt, the interest of the bank or pawnshop for using the loan, as well as the costs of selling it, if the borrower was unable to repay the loan on time. Accordingly, the cost of the collateral exceeds the cost of the loan itself by about 15-50%.
A bank, pawnshop or credit institution, when issuing a pawnshop loan, always takes into account such factors as the term of the loan, the interest rate on the loan, the borrower's credit history (in rare cases), his creditworthiness, the level of liquidity of the collateral, the current costs of assessing the collateral, overheads in case of default the borrower of their obligations.
The pledge of a lombard loan can be:
Jewelry (usually they are not valued at the cost of the product, their artistic and historical value is not taken into account, precious stones are not taken into account - by weight and standard);
· Securities (promissory notes, bonds, shares of large companies);
· Antiques (antique furniture, valuable marks, coins, paintings, etc.);
· Household appliances and electronics in working order (computers, laptops, televisions, camcorders, smartphones, tablets, etc.);
· Clothes in good condition (fur coats, jackets, shoes, etc.);
· Real estate (cottage, apartment, room);
· Vehicles (motor vehicles, cars, agricultural machinery, snowmobiles, etc.).
Lombard loans have their pros and cons. Therefore, before taking such a loan, it is necessary to weigh the pros and cons.
The big plus is that such a loan is issued quite quickly, does not require a long and deep check of the borrower's solvency, no need to provide certificates from the place of work, additional documents - it is enough to have a passport and a document certifying the ownership of the collateral. The purpose of a pawnshop loan can be anything, there are no sanctions for its early repayment, it is possible to extend the contract in case of repayment of interest, and issue a loan to pensioners.
But along with the pluses, we will also consider the minuses. Here are the most significant of them: a fairly high interest on a loan, an appraisal of jewelry at the scrap price, a short-term loan term - usually no more than one year, severe fines, the risk of irrecoverable loss of pledged items (in the event of a pawnshop robbery).
We conclude that a pawn loan can be taken in the case when it is needed for a very short period, a loan was refused in all banks, a bad credit history, a criminal record, or if the money is needed very urgently and without unnecessary red tape with documents.
Do not forget that a pawn loan is an alternative to a bank loan. The activities of pawnshops are regulated by individual provisions of the Civil Code of the Russian Federation and Federal Law of the Russian Federation No. 196-FZ "On Pawnshops", which spells out all the rights and obligations of both the pawnshop itself and those citizens who take out loans and mortgage property.
