Pledge is a type of loan where the borrower provides its asset to the lender as security. Pledge Pickup truck [รับจำนำรถกระบะ, which is the term in Thai] is also used for acquiring the loan. Here, the borrower will place the pickup truck as a security with the lender. A pledge acts as an additional guarantee for repayment of loan. It is a technique used by financial institutions when the profile of the borrower is not satisfactory. This type of loan is provided to ensure that the amount of loan is recovered from the sale of an asset if the borrowers default in making payment.
What is a pledged asset?
A pledged asset is the asset that is used as collateral for borrowing a loan. A pledged asset can be any asset whether it’s tangible, intangible, movable or immovable. However, one criterion that the asset must fulfill is that it must have a monetary value. The ownership of the pledged asset stays with the borrower. The lender only gets the possession of the asset. Upon repayment of the loan the possession of the asset is transferred back to the borrower. The ownership goes to the lender only in case of default in repayment of loan.
Steps in application of a loan
- Application: The person who is willing to borrow money is first required to make an application with the bank or any financial institution.
- Processing: The bank than process the application further to see if the person is eligible to get a loan.
- Documentation: In this step all the documents are verified by the financial institution and checks the genuineness of the documents.
- Sanction of loan: Once the documents are verified without any default the bank may sanction the loan.
- Disbursement: The last step is the disbursement of the loan amount in the bank account of the borrower.