A pledge or collateral guarantee is one that is lent against a guarantee that guarantees the operation of loans and that serves as a pledge and thing of value.
The term pledged comes from Latin and literally means pledge, that is, a guarantee of this type is a commitment of a movable good against the loan of money. In general, it is a guarantee against the lender who will use the pledge in deposit for the duration of the loan, that is, he cannot use it while the borrower periodically pays the credit payments periodically. Only in case the periodic payments are cut, the lender can execute the guarantee, auction it or sell it and recover with it the amount borrowed based on the value of the guarantee. The law prohibits the commission pact , that is,that the creditor adjudicates the good, but must offer it to the market in order to obtain the money from the debt. Only in case the sale and / or auction is deserted, the creditor can claim the good with the objective of canceling the debt.
The pledge guarantee differs for example from the mortgage in that while the second takes a real estate as collateral, the first does it with a movable property, which can be from a car to shares, deposit or collection rights.
Advantage of the pledge guarantee
The main advantages of pledged loans are the ease and speed of obtaining liquidity with a good that we have of value. Also, we can add that it is not necessary to sell the good, but to leave it in deposit waiting to be able to obtain more money with which to face the lifting of the guarantee.
On the other hand, sometimes one of the problems of these operations is the appraisal of the goods, which is usually below the market value, with the aim of remaining goods in a more profitable way. Also, in many cases the difficulty in attracting resources and being able to recover the good means that their possession is lost.
When the pledge guarantee
The pledge guarantee arises at the end of the fifteenth century with the mountains of piety, which just appear to solve the problem of the usury of the moment, with interests of up to 100% of the loans, and whose mode of operation, humble and for the people plain, it was to pawn its greatest values (jewels, cars, valuables …) to get liquidity