If your fine art is a considerable part of your net worth, it may work to your advantage to use it as collateral for a secured personal loan. With the fine-art market booming, you could borrow the amount you need and qualify for competitive loan terms by getting an art-secured loan. Certain lenders provide secured personal loans to borrowers who wish to back their loan with luxury items, including fine artwork. The lender will assess your collateral and then hold it until you’ve repaid your loan in full.
It’s possible to use fine artwork as collateral for a loan. Lenders that specialize in taking luxury items, such as fine artwork, as collateral generally provide loans from 30% to 80% of the piece’s value. Additionally, you’ll find varying requirements for the pieces of art.
Supply and demand, auction data, records and information about the artist are just a few factors that can be used in determining if your piece is acceptable as collateral.
How the process works
Each lender may have processes that vary slightly, but the steps are comparable. Here’s a basic outline of what happens:
Contact the lender. Give details about the art you’d like to use and what type of loan you’re looking for if more than one type of loan is offered.
Schedule an appraisal. This will likely be done at a physical office location, though some accommodations may be made if your piece is valuable enough.
Review the terms offered to you. You’ll be able to accept or reject the terms, and go over any questions you may have.
Schedule for the art to be transported. Either you will transport the art or the lender will transport it to a secure facility.
Begin repayments. You will likely make repayments once a month on your loan. Once the loan is paid off, your art is returned to you.
What are the benefits of using my fine art as collateral for a loan?
Potentially borrow up to 80% of your fine artwork’s value.
You don’t lose ownership of your artwork if you pay back the loan on time.
These are nonrecourse loans, meaning your art serves as the collateral and you don’t need to offer a personal guarantee.
What are some disadvantages of art-backed lending?
You may have to pay for the transportation to and from the designated holding facility.
Locations of lenders that specialize in these loans are limited.
Defaulting on the loan can mean the loss of your fine art and potentially damaging your credit score.
Despite security measures, there’s always the risk of something happening to your piece if it’s in the lender’s possession.
7 loan features to consider when choosing a lender
Here are seven additional factors to consider aside from the standard APR, loan term, amount available to borrow and turnaround time:
Appraisal. What is the lender’s appraisal process like? Find out if you’ll need to send in high-quality pictures and details, if an appraiser will come to your home, if you need to ship your piece somewhere or if you’ll have to take the piece to the lender.
Loan-to-value ratio. What percentage of the value of your artwork can you borrow? Some lenders will offer as high as 80% of the value.
Credit check. Look into whether the lender requires a credit check for you to be approved for an art-backed loan.
Insurance policy. If the lender takes possession of the piece, make sure it remains properly insured. Take into consideration if the lender charges extra for the insurance.
Fees. Some lenders require that you pay for the cost of transporting the artwork, while others provide it free of charge. Early repayment fees and late fees may also add to the cost of your loan, so inquire with lenders about fee structures.
Extensions. Hiccups can happen and you may be unable to pay the loan off by the term stated in your contract. See if potential lenders offer extensions or are willing to renegotiate terms.
Default policy. An essential consideration is the company’s default policy. With your fine artwork on the line, it’s important to consider and fully understand the terms of defaulting on a loan — should it come to that.
Unsecured personal loans to consider
*The products compared on this page are chosen from a range of offers available to us and are not representative of all the products available in the market. There is no perfect order or perfect ranking system for the products we list on our Site, so we provide you with the functionality to self-select, re-order and compare products. The initial display order is influenced by a range of factors including conversion rates, product costs and commercial arrangements, so please don't interpret the listing order as an endorsement or recommendation from us. We're happy to provide you with the tools you need to make better decisions, but we'd like you to make your own decisions and compare and assess products based on your own preferences, circumstances and needs.
How will the value of my artwork be determined?
An appraisal will take place either virtually or in person to determine the value of your artwork. Things that will be considered include:
Previous auction record
Private ownership record
Condition of the artwork
Current market value of similar pieces
Representative example: Arthur backs his loan with artwork
Arthur’s car broke down and he doesn’t have enough savings on hand to cover the cost of repairs. The repairs will cost him $2,500.00. Arthur doesn’t have a very good credit score, but after heading to his local bank, he discovers that if he puts up collateral to secure his loan, he can get a lower interest rate. Since his car has broken down, he decides to offer up an original piece of artwork. The artwork is worth $3,000.00, which works well with the loan amount that he needs. The bank offer him a secured personal loan with a competitive interest rate and good terms.
Cost of vacation
Secured personal loan
Origination fee of 3.00% ($75.00)
Total loan cost
*The information in this example, including rates, fees and terms, is provided as a representative transaction. The actual cost of the product may vary depending on the retailer, the product specs and other factors.
Art is often worth more to its owner than the market value at any time. Instead of selling a treasured piece, you may be able to work with a lender that will take the piece as collateral. Be sure to compare your options for both secured and unsecured loans, and fully assess the risks and benefits before you commit to a loan.
Frequently asked questions
It depends on the amount you’re looking to receive, when you need the funds, the current state of the market and if you’re willing to part with the piece.
Other loan options are available based on your needs, or you could choose another type of collateral, like a vehicle you own. You could also get a different piece of art appraised if you believe it will fare better.
Not necessarily. Ask the lender you’re thinking of working with if a credit check is part of the approval process. Some lenders will offer secured loans to those with fair or poor credit, since it’s a less risky loan type.
Some lenders will accept antiques, luxury cars and watches, fine wine and jewelry as collateral.
Rhys Subitch is a writer and editor at finder.com who tackles topics across the site. With half a decade of experience researching, editing and writing for a Fortune 500 company, university and several independent publications, Rhys brings readers the most up-to-date and curated info on all things finance.
How likely would you be to recommend finder to a friend or colleague?
Very UnlikelyExtremely Likely
Thank you for your feedback.
Our goal is to create the best possible product, and your thoughts, ideas and suggestions play a major role in helping us identify opportunities to improve.
finder.com is an independent comparison platform and information service that aims to provide you with the tools you need to make better decisions. While we are independent, the offers that appear on this site are from companies from which finder.com receives compensation. We may receive compensation from our partners for placement of their products or services. We may also receive compensation if you click on certain links posted on our site. While compensation arrangements may affect the order, position or placement of product information, it doesn't influence our assessment of those products. Please don't interpret the order in which products appear on our Site as any endorsement or recommendation from us. finder.com compares a wide range of products, providers and services but we don't provide information on all available products, providers or services. Please appreciate that there may be other options available to you than the products, providers or services covered by our service.