How to secure your loan with artwork

Get the money you need and hang on to that beautiful piece of art you love.

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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.

Can I use my fine art as collateral for a loan?

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:

  1. 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.
  2. 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.
  3. Review the terms offered to you. You’ll be able to accept or reject the terms, and go over any questions you may have.
  4. Schedule for the art to be transported. Either you will transport the art or the lender will transport it to a secure facility.
  5. 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?

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

Name Product Interest Rate Max. Loan Amount Loan Term Fees Min. Credit Score
Fairstone Personal Loan (Unsecured)
26.99% - 39.99%.
Varies by loan type and province.
6 months - 5 years
Fairstone offers unsecured personal loans up to $20,000
Mogo Personal Loan
5.90% - 46.96%
1-5 years
NSF fee - $20 to $50
Mogo offers loans up to $35,000 on flexible terms.
Ferratum Personal Loan
18.90% - 54.90%
6 months - 5 years
An established online lender with loans up to $15,000. Now accepting applicants on El and Social Assistance.
Magical Credit Personal Loan
19.99% - 46.80%
6 months - 5 years
A single administration fee of $194 for $1,500 loans and up
Magical Credit offers unsecured personal loans up to $20,000
Cash Money Installment Loan
6 months - 5 years
Vary across provinces/territories
Cash Money offers installment loans up to $10,000 for AB, MB and NB residents.
LendDirect Personal Loan
19.99% - 46.93%
No end dates
Borrow up to $15,000, based on your income and credit history, with a personal line of credit from LendDirect.
ConsumerCapital Personal Loan
19.99% - 35.00%
12 months - 5 years
Online lender offering personal loans from $500 up to $12,500.
LendingMate Personal Loan
43% (British Columbia and Ontario) and 34.90% (Quebec)
1-5 years
LendingMate offers loans to Canadians with poor credit with no credit checks. Guarantor required for application.
Fairstone Personal Loan (Secured)
19.99% - 23.99%. Varies by loan type and province
3-10 years
Varies by province
Fairstone offers secured personal loans up to $35,000.

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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:

  • The artist
  • 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$2,500.00
Loan typeSecured personal loan
Loan amount$2,500.00
Interest rate6.00%
Loan term6 months
Additional feesOrigination fee of 3.00% ($75.00)
Monthly payment $423.99
Total loan cost$2,618.93

*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.

Bottom line

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

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