Pledge creditor

A pledgee creditor is that type of creditor that requires the delivery of an asset, as a pledge, by the debtor. This good, therefore, is delivered as a guarantee of the initial return.

Usually, a pledgee requires a good as collateral when making a delivery, or loan of money. This good is commonly known as a garment.

Taking into account the above, there is also another way of calling this figure, which is the pledgee. Both uses are used interchangeably in the colloquial plane or in economic literature.

This credit profile is very widespread in the economic sphere, especially in the small economy of families and companies. They turn to these figures as a source of short-term financing.

Most often, these types of creditors accept valuables as pledges, from areas such as jewelry, luxury, art, new technologies or even real estate.

Main characteristics of the pledgee

Pledge creditors, or pledges, have some notable features:

• It can be both a natural and a legal person. They exist from individual creditors or lenders, to companies destined to the activity, such as pawn shops.
• The creditor guards the asset intended as a pledge as insurance or guarantee of recovery of the loan.
• Following the above, it is common to apply an interest rate to the initial or principal amount, taking into account the delay in repayment.
• His activity requires him skills of appraisal or exhaustive valuation of said assets.
• In cases of non-payment or expiration of the stipulated term, the creditor has full ownership of the property and can put it up for sale or auction it.
• Its activity is monitored and regulated by the different States and laws, with a view to avoiding situations of usury or other abuses of an economic and financial nature.

Until the moment of the agreed payment and the corresponding return of the property, it is the obligation of the pledged creditor to return to the debtor his pledge in the same conditions as the beginning of the contract.

That is, you have the duty to safeguard this guarantee during the specified period, being able to actively dispose of it in cases of non-payment.

There are special modalities in pledge terms, in which large corporations or banking and credit entities assume this profile when undertaking important loans. An example of this is the Monte de Piedad.

In these cases, the assets used as pledge become important extensions of land, real estate or significant financial values.