Many people do not have an idea about the pledged asset. Pledged asset it is a collateral solemn promise (pledged). A borrower takes this pledge to a lender. This is applied, which is taken in return for a loan. In this case, the lender has the authority to seize the collateral if the loan borrower defaults on the obligation. There are also some cases in which the lender asks the borrower to place a pledged asset that will be put in a separate account and will be controlled by the lender. These assets can be cash or securities.
How a Pledged Asset Work?
Let us assume that you want to borrow one lakh dollars from the bank to start your business. But the bank will hesitate to issue the money even if you have an excellent credit rating because if a borrower gets on the default side, the bank will be left with nothing to recover the amount. In this case, the collateral is signed by the borrower, which says that if the borrower gets on the default side, the bank or the lender can see is the collateral and sell the pledged assets, and that will recover any outstanding balance. In simple words, a Pledged asset is security, which borrowers give to a lender Recover the outstanding balance in case the borrower fails to pay the loan or installments back. There are people who take a car pledge (รับจำนำรถจอด which is the term in Thai), motorcycle pledge, and also take a loan for doing investments and business.
Why a Pledged Asset Matter?
It is a sense of security to a lender given by a borrower. And because of this, the pledged asset loans are better with receiving interest rates as compared to the unsecured loans. There is also a negotiation between the lender and borrower when it comes to the amount of pledged assets.
