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Lombard Financing is a powerful financial tool that empowers you to unlock the potential of your valuable assets. Whether you’re an investor looking to seize investment opportunities or an individual in need of liquidity without liquidating your assets, Lombard Financing offers a flexible and secure solution.
Lombard Financing, a time-tested solution with historical roots dating back to the Lombard family in Italy, offers a compelling avenue to harness the value of your assets without parting ways with them.
Lombard Financing, also known as Lombard credit or a Lombard loan, is a secured loan arrangement that empowers you to use your valuable assets as collateral to secure a loan. These assets often include marketable securities like stocks and bonds, derivative of Financial Instruments like Letter of Credit, Bank Guarantee and Standby Letter of Credit as well as other high-value possessions.
Lombard Financing is literally similar to monetization when your asset is a derivative of a Financial Instrument.
Here’s a closer look at how Lombard Financing typically operates:
1.Collateral: You, the borrower, offer your assets as collateral to the lender, such as a bank or brokerage firm. These assets serve as a guarantee for the repayment of the loan.
2.Loan Amount: The lender evaluates the value of your collateral and extends a loan to you, typically a percentage of the total collateral value. The specific loan-to-value (LTV) ratio varies based on the lender’s policies and the type of assets you provide.
3.Interest Rates and Terms: Lombard loans often come with competitive interest rates due to the security provided by the collateral. The terms of the loan, including the interest rate and repayment schedule, are negotiated between you and the lender.
4.Usage of Funds: You have the flexibility to utilize the funds obtained through Lombard Financing for various purposes. This can include investments, covering expenses, or financing other ventures.
5.Risk Management: It’s crucial to be aware of the potential for margin calls. If the value of your collateral falls below a specific threshold (the maintenance margin), the lender may issue a margin call, requiring you to either repay a portion of the loan or provide additional collateral.
Lombard Financing offers a range of advantages for individuals and investors:
Asset Liquidity: Access liquidity without selling your valuable assets.
Competitive Interest Rates: Enjoy competitive interest rates due to the security provided by collateral.
Investment Leverage: Leverage your assets to amplify your market positions for potential financial growth.
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