In every aspect of my business over the years I’ve tried to bring a fresh eye to old problems – to come up with creative solutions to those age-old issues that every business faces, and to offer something truly different. So, I’ve been particularly interested recently in an inventive new solution to one of the oldest challenges that there is out there – the need for quickly accessible funds.
A growing trend
Luxury asset lending is becoming an increasingly popular way for individuals to quickly – and relatively easily – turn the value they have tied up in their expensive assets into cash. So, what kind of assets am I talking about here? Well, as the name suggests, these are at the high end of the market – everything from classic cars, jewellery and boats to rare paintings. Luxury asset lending is now seen as a quick and easy way for people who have a lot assets to turn these assets into useable cash, and the number of well-respected operators who now lend on this basis is increasing.
So why more and more people using luxury asset lending – and what are they using it for? Well, it’s clear that this kind of lending has a number of distinct advantages for those customers looking to make the most of their assets. Firstly, the lenders who specialise in this kind of loan, secured against valuable, luxury assets, are used to dealing with high net worth individuals – so discretion comes naturally to them. That’s a big plus for business owners who might need to secure a short-term loan to help them close a deal, or even to pay their tax.
Secondly, this new breed of lenders can generally be trusted to offer expert evaluations of cost – something that’s absolutely essential in the rarefied world of classic cars or fine art for example. Customers are happy to deal with lenders who they see as experts in their field, who will help them to realise the true value of their assets, without having to sell the assets themselves.
Thirdly, it comes down to service – these kind of luxury asset-based loans are discrete and reliable, yes, but they’re also usually pretty fast. The lenders who operate in this market usually carve out a specialist niche in a particular area – say paintings for example – and are very focused on helping their customers to make the most of their assets as quickly and efficiently as possible. Expect accurate, informed valuations of the asset you’re thinking of using as security.
The loans are usually short term – which suits the kind of purposes this kind of lending is used for – a quick investment, a tax payment, or a deposit on a property deal. Even better, owners are often allowed to keep hold of the luxury asset that is being used as security, even during the period of the loan. Customers can usually get their assets back at any time, by paying the loan off and covering the interest that has accrued – rates are usually quite a bit higher that you’ll get from a bank, but they’re still competitive and I think the advantages far outweigh the disadvantages.
A new way of financing
I have to say that I’m a big fan of this kind of approach. I’ve always been really keen to help people to ‘have their cake and eat it’ – to help to create financial products that allow customers to indulge their passions – such as classic cars – but also to be able to enjoy the potential of their money too. For example, I’m proud of the OMNIA Bond that we’ve created, because I think, like many of the luxury asset lending products, it does just that. My dream behind the OMNIA Bond was to create an income for people, secured against their particular passion – be it cars, paintings or jewellery. This model allows customers to still enjoy their assets, while getting a regular cash flow from their value. It seems to me that luxury asset lending has been developed on similar principles, and I’ll certainly be watching its growth with interest.