§ 1482 Collateral Eligibility Requirements

This law says that if you borrow money and use your stuff (like a car or jewelry) as a guarantee to pay it back, that stuff must be worth at least 15% more than the money you borrowed. If you use money in a bank account as the guarantee, it must be worth at least the same amount as the money you borrowed.

Key Takeaways

•If you use your stuff (like a car or jewelry) to guarantee a loan, it must be worth 15% more than the loan amount.
•If you use money in a bank account as a guarantee, it must be worth at least the same as the loan amount.
•The government can say that some types of stuff cannot be used as guarantees for loans.
•Loans with guarantees and loans without guarantees must be kept separate and cannot be mixed together.

Example

You want to borrow $1,000 from a bank and use your car as a guarantee.

Your car must be worth at least $1,150 (which is 15% more than $1,000) for the bank to accept it as a guarantee. If your car is only worth $1,000, the bank cannot accept it.

How to Calculate

Market Value of Collateral = Amount of Loan × 1.15

Find out how much money you want to borrow (the loan amount).
Multiply the loan amount by 1.15 to find the minimum value your collateral must have.
Check if your collateral is worth at least that amount. If it is, it can be used as security; if not, it cannot.

You want to borrow $5,000 and use your boat as collateral.

Result: Your boat must be worth at least $5,750 to use it as collateral for the $5,000 loan.

An obligation shall not be deemed secured by personal property or collateral unless the personal property or collateral held as security is of a kind which has not been declared ineligible by the commissioner and unless it has a market value at least 15 percent greater than the amount of the obligations secured thereby or, if the security is a bank deposit, it shall have a face value at least equal to the amount of the obligations secured thereby. The commissioner may by general regulation declare any particular kinds or classes of personal property ineligible as security. An obligation shall not be deemed secured by real property unless the obligation and the lien securing the same conform to the provisions of Section 1486, 1489, 1494, 1495, or 1496 or the first sentence of Section 1493. Secured and unsecured loans shall be represented by separate notes and shall not be combined in any way within one note or notes. (Added by Stats. 2011, Ch. 243, Sec. 3. (SB 664) Effective January 1, 2012.)

Key Takeaways

•If you use your stuff (like a car or jewelry) to guarantee a loan, it must be worth 15% more than the loan amount.
•If you use money in a bank account as a guarantee, it must be worth at least the same as the loan amount.
•The government can say that some types of stuff cannot be used as guarantees for loans.
•Loans with guarantees and loans without guarantees must be kept separate and cannot be mixed together.

Example

You want to borrow $1,000 from a bank and use your car as a guarantee.

Your car must be worth at least $1,150 (which is 15% more than $1,000) for the bank to accept it as a guarantee. If your car is only worth $1,000, the bank cannot accept it.

How to Calculate

Market Value of Collateral = Amount of Loan × 1.15

Find out how much money you want to borrow (the loan amount).
Multiply the loan amount by 1.15 to find the minimum value your collateral must have.
Check if your collateral is worth at least that amount. If it is, it can be used as security; if not, it cannot.

You want to borrow $5,000 and use your boat as collateral.

Result: Your boat must be worth at least $5,750 to use it as collateral for the $5,000 loan.

Key Takeaways

Example

How to Calculate

Key Terms

References

§ 1482 Collateral Eligibility Requirements

Key Takeaways

Example

How to Calculate

Key Terms

References

Key Takeaways

Example

How to Calculate

Key Terms

Related Statutes

References

Key Takeaways

Example

How to Calculate

Key Terms

Related Statutes

References