A lien loan is when a bank branch or entity gives us a lot of money, in return for which leave a security, this may be our car, appliances, jewelry or other objects that have values. The amount that the entity will borrow will depend on the value that the object is assigned as collateral and the amount will be only a percentage of the value of this object.
To recover the collateral object must return the total of borrowed money plus interest earned on the time which has elapsed. In case of default, the entity that generated the loan will be entitled to retain the object during a stipulated in the contract in the company and after that if it still does not make the payment period, the entity may keep the object pledged as collateral.
Features lien loan
This type of loan is slightly different from traditional loans, having the following characteristics.
-There is to be made an object of value as collateral.
-The amount received on loan is subject to the value of the given object evaluated by the financial institution.
-It is a short term loan, the agency will be a period is usually a few days to a maximum of 3 months.
-The loan will be subject to the rules of the entity that provides.
-In the case of secured loans is not necessary to indicate what the funds will be used.
-In order to terminate the loan must return the full amount offered on loan. Some institutions allow pay interest at certain intervals and thereby increase the time to return the money.
In conclusion, a lien loan is a financial product that allows you to receive a certain amount of money with personal commitment to return in full including interest, making payments regularly and leaving as collateral a value object.