Wet Loan

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Definition of 'Wet Loan'

A wet loan is a loan that is secured by a pledge of collateral that is not readily marketable. This type of loan is often used by borrowers who do not have the necessary credit history or collateral to qualify for a traditional loan. The collateral for a wet loan is typically a personal asset, such as a car or a home. If the borrower defaults on the loan, the lender can seize the collateral and sell it to recoup their losses.

Wet loans are often considered to be high-risk loans because the lender is taking on a greater degree of risk in the event of a default. As a result, wet loans typically have higher interest rates than traditional loans. However, wet loans can be a good option for borrowers who do not have other options for financing.

There are a few things to keep in mind if you are considering a wet loan. First, make sure that you understand the terms of the loan and the risks involved. Second, be sure that you are able to make the monthly payments on the loan. If you are unable to make the payments, the lender can seize the collateral and sell it to recoup their losses.

Wet loans can be a good option for borrowers who need financing but do not have the necessary credit history or collateral to qualify for a traditional loan. However, it is important to understand the risks involved before taking out a wet loan.

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