Banks and auction houses are increasingly accepting luxury items such as vintage cars, watches, and art as collateral for multimillion-dollar loans. The wealthy have always relied on properties and commodities to qualify for loans, but forms of alternative collateral are on the rise and with decent loan rates.
A property developer in Miami used his collection of 59 artworks, including pieces by artists Jackson Pollock and Jasper Johns, to secure an $80 million loan for a condo project.
Financial Services Partner Jose Sirven said the unusual collateral means saving on a host of taxes and the insurance fees that come with traditional financing. Mr. Sirven said this also gives the client the benefit of "less intrusive" monitoring of his or her investment.
"The lender will not have the same level of concern, because at the end of the day, the ultimate backstop is the art," he said.
READ: Luxury-Backed Loans (subscription required)