Luxury Asset Lending on The Rise – Our Comments in Financial Times

Luxury asset lending can provide an alternative source of finance for individuals with significant wealth in valuable assets who prefer not to sell them to raise capital.

High-value assets such as classic cars, fine art, jewellery, watches, fine wine and yachts may, in some circumstances, be accepted as security for borrowing. This can be relevant for business owners and other asset-rich individuals whose wealth is not held primarily in cash. Learn more about mortgages for business owners.

Enness works with clients exploring finance options secured against existing assets. Availability depends on the asset, the lender's criteria and the proposed facility. Lenders may consider valuable holdings, including significant art collections, where suitable lending arrangements are available.

Lenders typically assess an asset's value and suitability before agreeing to provide finance. For fine art, factors may include the artist, provenance, rarity, condition, market demand, and comparable sale prices, along with information from galleries and auction houses.

Security arrangements vary by lender and asset type. Some facilities may require the lender to take physical possession of an asset during the loan term, while others may allow the owner to retain possession under agreed security and insurance arrangements.

Luxury asset finance is often structured for a defined term and may provide access to liquidity without an immediate asset sale. However, borrowing terms, interest costs, loan-to-value ratios, and valuation requirements vary by asset and lender.

Where assets remain in use or on display, additional agreements may be needed to protect the lender's security interest. For example, artwork held by a museum or gallery may be restricted from moving during the term of a facility.

Read the original article in the Financial Times.