Online Pawn Shop Offers Secured Personal Loans
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UPDATED: Oct 17, 2012
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Borro, a new online pawnbroker, is offering secured personal loans ranging from $1,000 to $1 million.
A secured personal loan is financing that is lent after a borrower offers up collateral. Any item of value that a lender agrees to is collateral. In the event that a borrower cannot repay a collateralized loan then the collateral will be seized and sold by the lender in order to make up for the lender’s lost money. As many people who are familiar with pawnshops know, examples of collateral include jewelry, cars, and memorabilia.
Borro offers loans that are secured against jewelry, fine art, classic cars and even wine collections.
While Borro originally launched in the UK back in 2008, it has only just begun operations in the US this year.
This expansion has been made possible by Borro’s meteoric growth of 650 percent in its first six months of existence. According to Business Wire, Borro “has essentially created a new category of online loans [called] Personal Asset Lending.”
Customers of Borro are able to get their money within 24 hours. Similar to payday loans, Borro does not evaluate credit scores or conduct credit checks. Instead, borrowers must only submit their collateral. If the valuable asset is small enough, Borro will provide a mail-in packet that can be returned to them via mail.
Once Borro receives an applicant’s collateral, they are able to evaluate it. Borro utilizes expert appraisers that determine the value of any objects they receive. After evaluation, Borro wires money to applicants’ bank accounts. These secured personal loans carry a monthly interest rate of 4 percent and an annual percentage rate (APR) of53 percent. Borro claims that their secured personal loans are usually repaid in three months.
If an interested borrower has collateral that is too large to simply mail in, Borro can dispatch expert appraisers that will visit the home or location of the borrower and collateral.
Between February and May of 2012, Borro lent $2 million in secured personal loans.
In the second week of October, Borro announced that it had secured $26 million in venture capital from Canaan Partners. The lender plans to use the money to expand operations in the U.S. and the U.K. while increasing its range of products.
“This investment comes at a pivotal time for Borro. The new funding will allow us to accelerate growth in the U.S. and U.K. as the leading online lending and liquidity marketplace for luxury personal assets,” said founder Paul Aitken to Business Wire.