Stacks of one, five, ten, and twenty dollars

 

Do you dream of getting a private jet or a private yacht? Well, if you do but haven’t been able to save up enough for it and don’t see a regular loan working out for you, then consider getting stock loans instead.

What Are Stock Loans

Stock loans are a type of securities lending, which involves providing some form of commodity or credit against a loan until it is repaid. Stocks are one possible commodity against which a loan can be given out.

Much like a regular loan, a fixed amount of money is lent to a person against a fixed interest rate which will have to be paid back over a certain amount of time. However, instead of letting the lender hold onto a valuable item as collateral, the person taking out the loan may transfer the ownership of certain stocks to the lender. Once the borrower can pay back the loan, they can receive their stock options back. If a borrower can’t pay back their debt, the stock options may be liquidated to make up the loss for the lender.

The great thing about this sort of loan is that it removes the chance of huge losses for both the lender and the borrower. While the lender can take over the invested stocks if they aren’t paid back, the borrower doesn’t have to worry about losing their house or car just to pay back the loan. The loan becomes its own collateral that the lender can fall back on if they default on the payment.

Using Stocks as Collateral

Different options are available regarding the type of stocks that can be put up as security when using them for collateral. Stock loans can be given against both common stocks and preferred stocks. It can be further divided down into secured stock loans and unsecured stock loans. So you can receive a loan against secured preferred stocks, unsecured common stocks, and vice versa.

To help differentiate between them, here’s a quick breakdown for these terms:

  • Common Stock: Standard stocks available at the market value of the company they belong to.
  • Preferred Stock: Priority over regular stocks. Valued higher and pays more dividends.
  • Secured Loan: Loans given against collateral of equal value to the loan.
  • Unsecured Loan: Loans given without collateral of equal value to the loan. Collateral is often valued below loan values.

A huge pile of money of varying value

 

Financing Through Stock Loans

Receiving financing through stock loans is an easier way to get high net-worth loans. With the potential value of stocks likely to be much higher than just a valuable item, you can even receive private jet financing. If you’re looking for high net worth loan providers, look no further than K Horton Financials. Get in touch with us to know more about our loan policy.

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