What is a pledge loan?

A pledge loan is a type of loan that requires the borrower to provide a valuable asset, such as jewelry, artwork, or a vehicle, as collateral for the loan. The lender holds onto the asset until the borrower repays the loan in full, at which point the asset is returned to the borrower.

Pledge loans are typically easier to qualify for compared to traditional loans, as the collateral reduces the risk for the lender. However, if the borrower is unable to repay the loan, the lender has the right to sell the pledged asset to recoup their losses.

Pledge loans are often used by individuals who may not have strong credit histories or income verification, but have valuable assets that they can use as collateral. These loans can also be a good option for borrowers who need quick access to cash, as the approval process is usually faster than traditional loans.

It's important to carefully read and understand the terms and conditions of a pledge loan before agreeing to it, as failing to repay the loan could result in the loss of the pledged asset.