How it works
The lender values your asset independently and advances a percentage of that value. The asset is held as security until you repay. Because the decision rests mainly on the asset, it can be quicker than income-led lending and less affected by credit history.
Typical loan-to-value by asset
- Commercial and investment property: up to 70% to 75%
- Land with planning: around 50% to 60%
- Classic and prestige cars: around 50% to 70%
- Watches and jewellery: around 50% to 70%
- Fine art: often 40% to 50%
Repaying the loan
Most asset-backed loans are short-term and repaid by selling the asset, selling another asset, or refinancing. Lenders want to see that exit before they lend. If you cannot repay, the lender may sell the asset to recover the debt.
Costs to expect
Pricing is usually a monthly rate plus an arrangement fee, valuation fees and legal costs. Ask for every cost in writing and compare the total cost of the loan, not just the headline rate.
Common questions
Can I borrow against my business equipment?
Yes, through asset refinance or an asset-backed facility, often while you keep using the equipment.
What happens to my watch or jewellery?
It is usually stored and insured by the lender until you repay, then returned to you.
This guide is general information, not personal financial advice. If you are worried about debt, free help is available from MoneyHelper, StepChange and Citizens Advice.