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Borro Review – Are Short-Term Collateral Loans Worth It?

By David Bakke

borro logoIn today’s tough economic times, getting a loan from a bank is much more difficult than it once was. And if you happen to have a less-than-stellar credit score, you may find yourself out of luck.

If you find yourself in such a situation, Borro may be able to help. The website offers short-term collateral loans against a wide array of high-end valuables. There’s no credit check involved, and you can receive money within 24 hours or less.

However, this is an extremely expensive method to get cash. If you have other options, pursue those first. But if you’re out of options, Borro is worth checking out.

How It Works

Borro lends money on high-end watches, fine art, jewelry, classic cars, yachts, and more. You have four options to apply for a loan. To apply online, just enter your name, address, phone, email address, zip code, and a brief description of your items – a representative then contacts you to further discuss your valuables. You can also call customer support to speak with an account manager, and if you live locally you can visit Borro’s valuation center in New York City, or request an in-home visit if your valuables are worth at least $10,000.

If you live outside of the tri-state area, you must send your valuables to Borro for an appraisal – and if you agree to a loan, Borro keeps your items until the loan is paid off.

To get your valuables delivered to Borro, there are a variety of options available. Smaller items can be sent through FedEx, and specialist delivery is available for fine art, antiques, and fine wine. Delivery charges are paid for by Borro on all items except cars.

Delivery of a classic car is set up through one of Borro’s preferred car delivery partners, and the cost varies depending upon your location. Your items are insured during transport and while stored at Borro’s facilities. The amount of insurance varies, but generally speaking your items are insured up to at least their market value. The insurance costs 1% of the amount of the loan, and storage costs 2.5%. These fees can be paid upfront or worked into the loan terms.

Once Borro receives your items, an appraisal is performed – this process differs depending on what you use as collateral. Following the appraisal, Borro makes you a loan offer. If you don’t accept, your valuables are returned to you insured and free of charge, and you don’t pay a thing. If you accept, your identity is verified, you sign the loan contract, and the money is delivered to you via bank transfer within 24 hours.

The monthly interest rate of the loan varies by the value of your items. Although the monthly rate seems reasonable, once you look at the APR, you’ll understand why this method of getting cash is so incredibly expensive. Here’s the breakdown:

  • Items valued up to$19,999 are eligible for a monthly interest rate of 3.99% (53.6% APR)
  • Items valued from $20,000 and $99,999 are eligible for a monthly interest rate of 3.49% (50.93% APR)
  • Items valued over $100,000 qualify for a monthly interest rate of 2.99% (39.1% APR)

These APRs are sourced primarily from Borro’s British website, as the company is not required to disclose APRs in the U.S.

Loans are written for a term of six months, but you can pay it off early if you’d like. The interest on your loan can be paid each month or in one lump sum at the end of the six months. There are no early redemption penalties. If you can’t pay off the loan after the initial six-month term, you can apply for an extension. If approved, all interest currently due on the loan must be paid, and a new six-month loan is written. Once your loan is paid off in full, your valuables are returned to you. If you don’t pay the loan back, your merchandise is sold.

While your items are in Borro’s possession, they are stored in a high-security environment. Watches, gold, and jewelry are stored in highly secured vaults located in-house, and fine art is stored off-site in Manhattan with a company called Day and Meyer. Cars are kept at a dehumidified, climate-controlled storage facility in Stamford, Connecticut, and wine collections are stored at a specialist wine storage facility with optimum temperature, humidity, and light conditions.

borro screenshot

Key Features

  • Solid Customer Service. If you have a question, you can send an email, call, or use the live chat feature. Help is available Monday through Friday from 8am to 8pm EST, and on Saturdays from 9am to 6pm EST. The customer service reps are helpful, courteous, and informative.
  • Secure. The website secures your personal information using a Norton Secured SSL certificate. And while Borro may share your personal information for the purpose of verification or valuation, it is not shared with third parties for marketing purposes.
  • FAQ Section. Before you attempt to contact the company, check out the FAQ section. It is comprehensive, well-organized, and can answer most of your basic questions.

Advantages

  1. More Money for Your Valuables. Borro claims to offer 50% to 70% of the resale value of your item(s). In contrast, most pawn shops offer 50% or less.
  2. No Credit Check. Borro performs no credit check. The amount of your loan is based strictly on the value of your items. And if you default on your loan, your items will be sold, but this will have no effect on your credit report.
  3. Convenient. The process can be completed in just a few hours. When you accept the loan offer, you get your money in 24 hours or less.
  4. Multiple Payoff Options. When it comes time to pay off your loan, you can do so via bank transfer, debit card, or cash. There may be a fee involved if paying by debit card.
  5. Better Interest Rates Than a Pawn Shop. With a typical pawn shop, monthly interest rates generally fall between 15% and 25%. The highest monthly interest rate you pay with Borro is 3.99%.
  6. Secure. Your items are insured from the time they leave your hands until the time you receive them back. Insurance for your items is provided by Lloyd’s of London. In the unlikely event your items are lost or stolen, you will be compensated based on current market value. And Borro’s valuation experts have worked at auction houses such as Sotheby’s, Christie’s, and Bonhams.
  7. International. Borro offers its services to U.K. customers as well.

Disadvantages

Though there are fewer disadvantages to list than advantages, the expense of this type of loan can’t be understated.

  1. Very Expensive. While the monthly interest rates seem low (and are competitive for collateral-based loans), take a look at the APR. It’s extraordinarily high – this type of loan is best used by those who have exhausted all other options.
  2. Limited Geographically. Unless you live in New Jersey, New York, or Connecticut, the in-home valuation isn’t an option, and visiting a valuation center wouldn’t make sense.
  3. Website Issues. When attempting to apply for a loan, I experienced several glitches just trying to enter my personal information. You may want to call in or use live chat to start the process.

Final Word

The services offered by Borro are solid, and it is a reputable website. The staff is helpful and informative, and you can generally get more for your valuables than by taking them to a pawn shop. Having said that, this is still a very expensive way to get cash. I would suggest using Borro only after all other options have been exhausted and only if you fully believe that you can afford these sky-high interest rates – because you will lose your items if you do not pay back the loan.

You can certainly get better terms by using a credit card cash advance or a home equity line of credit – if you have the credit for either. Otherwise, consider simply selling your valuables instead. You might be parting with something dear to you, but you’ll avoid that hefty monthly interest payment, and may receive more than what Borro offers.

Have you had any personal experience with Borro?

David Bakke
David started his own personal finance blog, YourFinances101, in June of 2009 and published his first book on ways to save more and spend less called "Don't Be A Mule..." Since then he has been a regular contributor for Money Crashers. He lives just outside Atlanta, GA and most all of his free time is taken up by his amazing three year old son, Nicholas.

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Comments

  • Katy Bolding.

    great article. I agree its hard to get a loan with the way the economic is at this time. Thank you

    I pay for articles written and posted in
    financial blogs.

    Thank you.

  • Katy Bolding.

    Yes I do agree that a short term collateral loan is worth it, but only if the interest is low. But you do have allot of good information.

    I pay for articles written and posted in
    financial blogs.

    Thank you.

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