Definition of collateral assets – Hello Sinaumeds friends , this time we will discuss collateral assets which is a term related to finance. You may have used collateral, but you may not know the importance of collateral.
In the world of finance, the term has several definitions. This time I will discuss about collateral assets related to finance and others. Discussions about collateral assets usually also refer to other terms such as investment, high ratio loans, and banks.
Before discussing collateral assets, it would be nice if we discussed the definition of assets first. In order for Sinaumeds’ friends to further deepen the explanation of the assets themselves.
Definition of Assets
Assets are assets, property and property that support business operations and can be exchanged for cash. All company assets refer to physical or non-physical resources acquired through transactions and are the result of past activities.
Assets can also be defined as assets of a business entity in the form of rights or goods acquired by the entity through past activities or transactions, which must be measured in monetary units. The two definitions above conclude that assets are resources that can be used to carry out various activities such as Operations, Financing and Investment.
The definition of assets includes various types of assets or wealth owned by a company. This wealth may have existed from the beginning, or it may be the result of the company’s operations over a period of time. It can also be called an asset.
Because we know that anything that can be valued in money can be called an asset.
Assets, on the other hand, are usually used as a term to describe a title. As a business person, you often deal with financial reporting, so you should be familiar with the term.
It is said that a good company is a company that manages its assets well. This can be seen from how the company manages these assets to generate optimal returns.
Assets are assets that are not only stored. However, the company allows him to work for the benefit of the company. Of course, its management must be calculated and carried out carefully. One wrong step the company can lose its assets.
Definition of Collateral Assets
Collateral assets, or collateral assets, are assets in the form of land, securities, or other valuables tied up as collateral to support the process of issuing bonds, loans, or corporate bonds. In other words, collateral assets are valuable assets that are used by lenders as collateral to enable borrowers to incur debts or credit.
Assets used as collateral can later reduce the burden of loan advances and subsequent payments. Assets that can be pledged as collateral can be cash, stocks, bonds or other securities.
Advantages and Disadvantages of Collateral Asset Transactions
1. Ownership of Secured Assets
One thing that is useful for someone about collateral assets is that the borrower can still retain ownership of the property used as collateral assets. That’s good news. This is because there are many types of loans that carry a big risk if the borrower is unable to pay, including title certificates.
2. Avoid Taxes
If you want to take out a loan and avoid tax penalties, borrowing using collateral assets might be an option. Thanks to collateral assets, borrowers can avoid tax penalties when selling assets. It is very important to consider this method.
3. Avoid Big DP
Because of the low loan down payment, not a few people use collateral assets. Collateral assets benefit the borrower by avoiding high loan interest rates. However, this applies if the lender enforces it. But don’t worry. All lenders with procedures that have been made offer this service.
4. Low interest
Want to borrow or open a trading business with low interest rates? Try collateral assets. Another advantage of collateralized assets is that borrowers can enjoy lower interest rates on mortgages and loans. That’s a good thing.
5. Keep Earning Income
Another advantage of collateral assets is that the borrower continues to earn income. However, the borrower is obliged to regularly report income from investments made.
6. Limited Securities Transactions
Although collateral assets have many advantages, they also have disadvantages. Some of the deficiencies that exist are that they do not deter potential borrowers. Considering that the risk is not too big, not a few still choose collateral assets. However, a large number of borrowers face this drawback.
One of them is the limited ability to buy and sell securities. If your investment is stocks or mutual funds, these transactions are restricted. In this case, the trade will remain safe unless you invest in stocks.
7. Risk of Losing Wealth
We have said that the tenant can retain ownership of the property, but this does not mean that it is not a certainty. Because the borrower can still lose his property if there is a default. Therefore, be careful when making loans and depositing collateral assets.
8. Be careful when you don’t pay a down payment
Collateral assets are very convenient for borrowers because they can make a low interest down payment. However, you also have to be careful. Think twice before asking for collateral because you will pay full interest on your loan if you don’t make the stipulated down payment. So be smart when taking out a loan.
9. Lenders Can Request Additional Funds
Be careful when borrowing money with collateral assets. Lenders are more likely to ask for additional funds if the transaction value of the guaranteed security is low or decreases. This scenario could suddenly happen anywhere at any time.
10. Relatively Risk of Default
Loan collateral asset transactions have a relative risk of default. This may be due to a lack of control over borrower repayments. Therefore, it is very important for lenders to allow potential borrowers to make payments.
Examples of Assets That Can Be Used as Guarantee Assets to Banks
Applying for a loan from a bank usually requires collateral in the form of valuable assets called collateral or collateral assets. Loan applications are usually not approved by the bank if the loan amount does not meet the terms and conditions. According to Law Number 10 of 1992 concerning Amendments to Banking Law Number 7 of 1992, guarantees are any additions provided by a debtor to a bank in connection with the provision of credit or facilities based on sharia principles.
Loan guarantee is basically a business in the form of cash flow from the borrower’s business, but in some cases collateral assets in the form of assets are needed to further enhance the bank’s credibility.
Quoting the attitudeiuangmu.ojk.go.id page , this security functions as a security tool or final risk mitigation tool or is given to debtors (borrowers) whose creditors (lenders) are in arrears or those who fail to fulfill their payment obligations. What assets can be used as bank guarantees?
Terms of assets that can be used as collateral assets
- Has economic value, in the sense that it is valuable and can be exchanged for money
- Ownership can be easily transferred
- The lender has the right to materialize the collateral and can legally own it directly.
Types of assets that can be used as collateral assets
Tangible collateral assets
Activation of self-tangible collateral can be divided into two parts, namely movable collateral assets and immovable collateral. Examples of mobile collateral activation are motorized vehicles such as cars, motorcycles, and ships. Real estate collateral can be land, property, precious metals, factory machinery, inventory, gardening, or animal products.
Intangible collateral assets
Examples of these intangible securities are patents, intellectual property rights, stocks, bonds, deposits, etc. Returning collateral assets is also very easy. Because the collateral assets will be returned to the borrower after the loan period with the bank ends.
However, if the lending and borrowing debt cannot be repaid, then the collateral assets will automatically be confiscated and become the property of the bank. To avoid default (loss) in payment, please pay attention to several aspects that need to be considered when applying for a credit/loan.
Income, Amount of Mortgage Loans, Interest/Profit Sharing. This is to maintain a good reputation by always paying installments on time in a disciplined manner. So you need to use your credit/financial instrument wisely and use it for something productive so that your additional funds can increase your income and welfare in the future.
1. Building or Property
Buildings such as houses, apartments, factories, warehouses and hotels can be used as collateral for collateral for loan assets, but you must ensure that the building or land has an IMB or building when applying for this property guarantee. You can prove it with proof of IMB and the building is in progress and there is no dispute.
The value of buildings and land is usually adjusted to the condition of the assets and the perimeter of the building. If your building assets are in good condition, you can get a loan in the millions to billions in a period of 2 to 10 years.
For this reason, before you apply, you can first consult with your bank to get more specific information about the loan value that you can get from the assets you hold as collateral.
2. Soil
Land containing real estate assets can be used as collateral for the loan to be guaranteed. The increase in land prices from year to year has become a very popular collateral for borrowers with collateral assets. Of course, land is a kind of collateral that the bank considers and accounts for.
Even if inflation rises or the rupiah depreciates, land assets and land investments are still in demand. This is the legal guarantor of this collateral asset criteria loan.
However, you also need to ensure that the land that you will use as collateral for your loan is land that already has a certificate of ownership so that you can be legally responsible for it. In addition, you must be able to prove land ownership, such as property rights, usufructuary rights, or government land use rights.
3. Factory Machines
Factory machinery is also an asset that you pledge as a guaranteed loan, but will be analyzed to determine its value, so make sure your factory machine is technically appropriate and in good condition.
4. Motor Vehicles and Cars
If you apply for a loan and are confused about choosing collateral, you can also provide your vehicle as collateral. Vehicles such as motorbikes and cars of various brands. Make sure you have proof of vehicle ownership or BPKB as collateral for the loan.
When claiming a guaranteed car, the age of the car cannot be more than 10 years and of course it must be in good condition. Apart from BPKB, STNK and vehicle keys are usually used as collateral. Because a car is not an investment and continues to increase in value, a secured loan using a car as collateral usually only has a term of five years.
5. Stocks
You can also post securities such as stocks as collateral assets for secured loan applications. However, make sure your shares are actively traded on the Indonesia Stock Exchange (IDX) and have investment grade. Choose shares from well-known companies that are still active so that your assets will be considered by banks in the form of shares that you own.
6. Ships and Planes
Ships and aircraft can also be used as collateral for credit loans with collateral assets, which are often carried out by certain business actors who need additional business capital.
Therefore, loan transactions will be very important. However, it should be noted that only ships and aircraft with a minimum total volume of 20 cubic meters and a maximum gross weight of 20 cubic meters can be used as collateral.
So, here are some good properties to use as collateral for KDA. For instant bank approval for your credit, make sure you have a good credit history, usually the information on all loan transactions that you make is stored in the Financial Information Information Service (SLIK) system by the Financial Services Authority.
Make sure that the loan amount you submit will be within your means. Calculate and compare your income and expenses every month. It’s best not to let your future mortgage payments be worth more than 30% of your monthly income. Also make sure the conditions that will be used to apply for a KDA loan are complete and appropriate.
7. Deposit Guarantee
Deposit guarantees are often used to apply for multipurpose loans. Some people choose deposits as collateral because they can be more efficient and maximal. However, you need to know that not all banks accept deposits as collateral for credit.
Several national banks have accepted deposits as assets that can be used as collateral for KDA. However, you need to know that the deposit in question is a deposit at the same bank where you applied for a credit guarantee. This will make it easier for banks to verify borrower data.
Submitting a KTA loan with a deposit guarantee will provide a faster verification time, so the process is faster. In addition, credit lines will also be easier to obtain because they are determined by the amount of deposits that will be guaranteed.
Another advantage of this form of deposit guarantee is that the borrower also does not need to mortgage land or real estate and the interest rate that must be paid will be lower, calculated based on the credit interest minus the deposit interest rate.
However, during the crediting period, the deposit cannot be used or withdrawn. This is different from collateral for a house or car, which can still be used by the borrower during the loan period.
8. Gold As Collateral
Gold can be one of the assets that can be used for Islamic banking. Because in ordinary banks, gold is not allowed for collateral. As an alternative, you can also use gold as collateral at a pawnshop by following a pawn system where the gold is held by the lender or bank concerned.
If you apply for a loan from a pawn company with gold collateral assets, you can get a loan worth 95% of the estimated collateral value that you secured starting from Rp. 1 million to 250 million Rp. Apart from that, now there is a gold-guaranteed f intech peer-to-peer lending that you can register with, such as Danain .
Conclusion
Therefore, it is necessary to review the collateral assets. This term is part of a lending and borrowing transaction, in which the borrower offers a loan to the lender as collateral.
If at any time the borrower fails, the collateral assets can become the property of the lender. This method certainly has advantages and disadvantages. Therefore, it is very important for borrowers to think carefully before deciding to borrow with a guarantee.
Not only can it be done where you live, guarantees can also be done online. There are many lenders that offer collateral assets services. This collateral asset may interest you.
But remember, think carefully to avoid risky things. So I hope this review was helpful and added some insight on loans. So you know which method is the most comfortable and least risky.