Do banks still understand the meaning of collateral?

RSL

I am looking to buy a property at auction which, if successful, will require a payment of 10% plus some other fees when the hammer drops.

I don't really have much faith in the banks, so only keep about £5k in a single account, but have a fantastic credit history with them for many years, and am mortgage free on my property.

I went into my branch of Lloyds and explained everything in great detail, then asked for a secured overdraft facility of £10k for a period of only 30 days, explaining that in about 16 days there was £10k cash coming in, just like the other times this has happened, but that the auction will happen in between these payments arriving.

I placed the gold bars on the table and offered them as collateral.

So...

£5k in the account
A repeat of the regular £10k arriving in the account just like previous months.
£15k of gold on the table as security.

Sit down for this one...

Lloyds bank declined the overdraft!

No wonder the economy is so screwed up by these Banksters and their actions.

PasturesNew

I'd just do a money transfer over the phone once the hammer came down, then hand over my debit card... I can do that without notice from savings to current account.

I'd also not go wandering about in public with gold bars in my pocket.

innovate

RSL wrote: »

I don't really have much faith in the banks, so only keep about £5k in a single account

Like everyone with accounts in banks/BSs that offer FSCS protection (this includes Lloyds), you are perfectly safe with up to £85K in any financial institution (£170K in joint accounts).

May be if you had tried it without the gold bars, you would have had better luck?

callum9999

RSL wrote: »

I am looking to buy a property at auction which, if successful, will require a payment of 10% plus some other fees when the hammer drops.

I don't really have much faith in the banks, so only keep about £5k in a single account, but have a fantastic credit history with them for many years, and am mortgage free on my property.

I went into my branch of Lloyds and explained everything in great detail, then asked for a secured overdraft facility of £10k for a period of only 30 days, explaining that in about 16 days there was £10k cash coming in, just like the other times this has happened, but that the auction will happen in between these payments arriving.

I placed the gold bars on the table and offered them as collateral.

So...

£5k in the account
A repeat of the regular £10k arriving in the account just like previous months.
£15k of gold on the table as security.

Sit down for this one...

Lloyds bank declined the overdraft!

No wonder the economy is so screwed up by these Banksters and their actions.

How exactly are these connected? And you know full well that mortgages exist so you are therefore fully aware that banks know full well what collateral means, and do still use it.

However, walking into your local Barclays branch trying to barter for a large overdraft using gold bars seems beyond ridiculous to me! Even if the bank would want to engage in such a plan (why exactly would they want to go through the hassle?), do you actually expect a local Barclays branch to be staffed by gold experts and be equipped to deal in gold bars?

maninthestreet

You dumped £15K worth of gold bars on the counter???
Perhaps you could take them to a pawn shop and get the cash that way?

meer53

Where does the "regular 10k" come from ?

Maybe they just don't like the way you run your account ?

dalesrider

RSL wrote: »

I don't really have much faith in the banks,

but have a fantastic credit history with them for many years, and am mortgage free on my property.

asked for a secured overdraft facility of £10k for a period of only 30 days, explaining that in about 16 days there was £10k cash coming in, just like the other times this has happened,

I placed the gold bars on the table and offered them as collateral.

So...

£5k in the account
A repeat of the regular £10k arriving in the account just like previous months.
£15k of gold on the table as security.

Sit down for this one...

Lloyds bank declined the overdraft!

What was the o/d secured on then ?
The gold? Could you prove ownership? Could you prove was the real thing and not just lead painted gold?
How much is each bar worth? and can you prove this...

Where is the 10k comming from and can you prove this payment is going to arrive?

Why not sell one of the bars. Put the money in your account and then buy some more when you have bought the house. Which you may or may not actually win....

I think the bank has simply matched the level of faith you have in them, by not going with your scheme.

RSL

PasturesNew: I am between large cash amounts going into the account and they will not be cleared in time for the auction date, so I was looking to bridge that gap with an overdraft. I only offered the bars thinking, wrongly, in these hard times the banks would prefer to fully protect any lending they would make. I do not wish to cash in/sell the gold bars.

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innovate: I would rather not fund banks with deposits earning such little return for personal reasons, so I invested in metals and they have performed splendidly.
I thought the bars would be acceptable collateral, a bit like lending against small blocks of clay that make a house wall.

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callum9999: I honestly could not see the difference between a house as collateral, a pension bond or gold bullion. What is the difference? It was for a 30 day overdraft facility back by an object of determined value that was 150% of the amount being sought.

That is better collateral than a house gives the bank.

So I fail to see why such an idea sounds so strange to banks. Even the banks hold bullion on their accounts.

The hasstle seems much less than all the solicitors paperwork to lend against a property. They put the gold in their safe for 30 days and fill out a receipt and overdraft form and both sides are happy.

No idea where Barclays comes into this. Sorry.

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maninthestreet: Such a move in a pawn shop is not a very viable option. The costs would be prohibative and you would lose a lot on such a transaction.

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BugsyBrowne: Stop making posts from a cowshed. If you suffer a medical condition then see a doctor about it because your useless comments are achieving nothing here.

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meer53: I have an online business and my wages coming in each month. This is not left in the account but gets invested in bullion and other ventures. The auction has just happened to come up right in between these payments and I'm sure the autioneers will not be delaying it just because my money is turning up 10 days later, allowing for the "bank delays" for your money to clear to your account. This is why I only wanted a short term overdraft.

I don't think any bank likes debt free customers having any of their products. I am sure we are classed as non-profitable and to be avoided in the name of ever bigger profits.

==========

Worst case senerio is to sell 10oz of gold for a few weeks, and when the cash arrives at the end of the month, buy it back and take a hit on the premiums levied on it's sale/purchase plus any price increase. Just would have been nicer to pay a much lower fee with an agreed overdraft facility.

pmduk

Perhaps the bank doesn't want to start taking physical collateral? Local branches are unlikely to have expertise in bullion - or the facilities to store it.

RSL

The gold is certified gold with receipts. The money used to buy it was from debits on the lloyds account, just like all the other gold purchases.

Gold is a very standardised commodity traded for centuries. Sealed gold bars are easy to trace right back to the mining company that sold the ore to the refiners that make and assay them.

There is something called the Spot Price set each day in London for the world to use. It is internationally accepted value for such bullion.

The regular £10k is the one that shows up on the account for the past 2 years. The account deals with all payments in and out for this business.

I think the bank has demonstrated that the local manager simply has no authority to decide whether a cup of coffee should have one or two spoons of sugar in it any more.

RSL

pmduk wrote: »

Perhaps the bank doesn't want to start taking physical collateral? Local branches are unlikely to have expertise in bullion - or the facilities to store it.

They seemed to have a huge safe in which to store bits of paper in, so I would not question them being scared of holding a palm sized block of metal which is all 10 bars amount to.