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*After* I ask for money - How does Collateral work in Eve?
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Sleekman
Sebiestor Tribe
Minmatar Republic
#1 - 2011-12-13 18:41:43 UTC  |  Edited by: Sleekman
I'm trying to figure out how Collateral works in loans in eve.

In real life, collateral is kept by the loan originator and there is legal enforcement against the property should the loan fail.

In eve, that is obviously not the case, so what options are available?

Do you give the property to the loaner?
If so, why not just sell the property, could they not just keep it if the price went up on that item instead?
Is this how you do partial collateral? you give them items worth only a percentage of the loan?

Are there third parties like Chribba who hold the collateral?
If so, who and what kind of costs are you looking at?

Anything that I've missed?
Tekota
The Freighter Factory
#2 - 2011-12-13 19:51:59 UTC
Sleekman wrote:

Do you give the property to the loaner?


Yes, or to a third party you both trust.

Sleekman wrote:

If so, why not just sell the property,

Some goods are harder to shift quickly or would be troublesome to repurchase later (eg. rigged and faction pimped toys), other goods make sense as they can be used as both collateral and tooling (eg blueprint lockdown)

Sleekman wrote:
could they not just keep it if the price went up on that item instead?

They could, which is why sometimes a third party is used.

Sleekman wrote:
Is this how you do partial collateral? you give them items worth only a percentage of the loan?

Yep.

Sleekman wrote:
Are there third parties like Chribba who hold the collateral?
If so, who and what kind of costs are you looking at?

A lot of the names I'd roll off have gone on reduced hours lately, I'm sure some names will arise from this thread. Costs vary.
Sleekman
Sebiestor Tribe
Minmatar Republic
#3 - 2011-12-13 19:53:58 UTC
Very Helpful
My thanks, and a Like, for you.
RubyPorto
RubysRhymes
#4 - 2011-12-14 02:30:54 UTC
One important thing to note. Your collateral will usually be valued at some % under firesale price; i.e. repackage ship to go on market, sell to buy orders, etc. Collateralized loans in Eve are a pawn shop, high interest, low valuation.

"It's easy to speak for the silent majority. They rarely object to what you put into their mouths." -Abrazzar "the risk of having your day ruined by other people is the cornerstone with which EVE was built" -CCP Solomon
Shar Tegral
#5 - 2011-12-14 03:10:03 UTC
Sleekman wrote:
If so, who and what kind of costs are you looking at?

I still do this for people.

I receive collateral from you.
I receive isk from lender.
I give isk to you, hold collateral for lender.

If you come through, you return isk and amounts to me which I give to Lender. You get your collateral back.
If you don't come through, lender gets collateral.

I charge 1m isk per month of holding.

I don't care about how much or the valuation of the collateral.
I just need to be sure both parties agree to amount and collateral.

I like it simple, much like myself.
Miss Margin
Deep Core Mining Inc.
Caldari State
#6 - 2011-12-14 17:39:32 UTC
Do you give the property to the loaner?
This or a third party, Chribba was mentioned, I think Darkness is still on the trustworthy list. Basically anyone for whom the amount of collateral is a trifle and who seems to be honest is a good bet.

If so, why not just sell the property, could they not just keep it if the price went up on that item instead?
Yep. See third party.

Is this how you do partial collateral? you give them items worth only a percentage of the loan?
In my experience you give 110% since you'll be trying to liquidate the collateral immediately if things go wrong. As an example, I give you 500 isk, you give me a ship worth 550M isk. If you try to run off or get kit by a busy I can immediately sell the ship at a 10% discount to get my isk back without having to spend hours playing market games. This also allows for some market volatility (in case prices tank) while keeping my collateral worth the initial loan.

Partial collateral to me is a significant risk. You give me 1B i get 500M in collateral. I basically just gave you 500M isk and am hoping on trust.

If so, who and what kind of costs are you looking at?
It really varies, sometimes people are charitable on pitiful souls, sometimes they charge strictly based on their time. If there is a standard price I am not aware of it.

Anything that I've missed?
Yes, blue prints can also be locked down within a corp. So they can be used as collateral. This is convoluted and can still be subverted (see titans4U) but is a viable option as others have made it work.

PS wtf: only five quotes per post?

**This character is for Sale, pure trade skills. ** https://forums.eveonline.com/default.aspx?g=posts&m=517979#post517979