Pledged Asset

What is a Pledged Asset?

Pledged asset is defined as the asset which is given to the lender in order to secure the loans. The word pledge means a promise or such a thing which makes you bound to do something. So the term pledged asset is an asset which is given just to prove that the borrower has got the capacity to pay the market. If you are associated with the financial market since the dawn of business, you must be knowing about a document or a particular asset must be deposited in order to get a loan.

Various nuances of Pledged Asset

If you are planning to start a business or you are going to assign a new project, you require a loan for getting the work done properly. But a proper plan submission is not enough to get a loan. You must know the various categories of loan market. The primary objective of a loan market is to get a proper proof so that you can get enough evidence that you can repay your loan. You can choose from a range of documents like the documents of a registered building or a valuable asset like gold.

After getting your pledged asset ready for getting the loan you should be careful about the clauses of the loan functioning. If you are completely pledging the asset to the lender then there is a risk of losing the total asset in case you are unable to repay the loan amount along with the interest. If you do not pay the installments at the proper time intervals you have to pay your interests from the value of your asset. Be very careful otherwise you can lose your asset totally and the lender can claim the rest of the amount from you.

Giving a loan by the means of pledged assets is an old book trick. You can be very frank in the deals clause you get from the lender. In the olden days the goldsmiths used to deal in gold by this method. Gold ornaments were taken and a loan is given for a term and the ornaments are forfeited for failing to repay.