Types of Collateral Loans

There are several type of loans you can consider. If the lender requires some type of collateral, there are a number of items you can use depending on the lender's requirements; larger sums of money usually require collateral.


One type of collateral that you can use for a loan is your home. When you purchase your home, you take out a mortgage and sign a promissory note; your home is pledged as security for the loan. The mortgage deed is then usually filed with the county recorder's office.


Some lenders will want you to use your car as collateral for a loan; then, if you don’t pay, your car can be repossessed.



There are some companies that loan to businesses, and they require collateral as well; many businesses will use equipment and machinery as collateral for a loan.


Stocks and bonds

Stocks and bonds can be used as collateral for a loan; these are monitored by the government, and must meet certain qualifications before they are considered for collateral.



Some companies will use their inventory as collateral for loans.


About the Author

Melvin J. Richardson has been a freelance writer for two years with Associated Content, and writes about topics such as banking, credit and collections, goal setting, financial services, management, health and fitness. Richardson has worked for several banks and financial institutions and gained invaluable experience and knowledge. Richardson holds a Master of Business Administration in Executive Management from Ashland University in Ashland Ohio.