Four Types Of Collateral You Didn't Even Know You Had

Posted on: 17 May 2016

Do you need a loan, but think you don't have the collateral? Many people think of collateral as something really large and expensive, such as a house or a wedding ring. In fact, most personal loans need very little by way of collateral -- there are many options that you might not even realize you had.

1. A Pay Stub or Proof of Salary

Believe it or not, a pay stub usually serves as collateral for small private loans. Private lenders are aware that a pay stub is essentially proof that you will have money coming in. That doesn't mean it's a payday loan (though these are useful as well), just that you can acquire a personal loan by using your payday check stub as collateral for future payments. Just note that this does mean that your wages may be garnished if you fail to pay back your loan.  

2. Equity in Your Vehicle

If you have equity in your vehicle you can always get a cash title loan. A cash title loan uses your vehicle as collateral, but don't worry; you're still able to drive the vehicle around as necessary. The title loan simply puts a lien on the vehicle so you can't sell it or trade it to someone else until you pay off your loan. The more equity you have, the more collateral you have to borrow against.

3. Gold Jewelry

You don't need a wedding or engagement ring for collateral. Any gold jewelry is worth -- you guessed it -- its weight in gold. All you have to do is find jewelry items that have a high gold value, and you'll be able to get a loan based on the item's weight. Even damaged gold items can be use as collateral, because the value is in the metals. Other types of jewelry that can be used as collateral include precious gems such as diamonds.

4. Tools and Equipment

Do you have a collection of unused tools sitting in your garage? You might be surprised to discover that many lenders love taking in tools -- they know that tools are in demand, and so they will be able to easily sell them if you aren't able to complete the payments on your loan.

Collateral can be extremely flexible depending on your lender. Don't just assume you don't have anything available. Contact your lender before making any decisions and ask them if they can help you. Visit to learn more.