Covid-19 has had serious and far-reaching consequences. While certainly not at the top of the list in terms of importance, one of these is the impact it is having and is likely to have on asset values. The luxury markets are notably difficult to predict and often there seems to be no hard and fast rules – a wider economic downturn doesn’t always correlate to a direct drop in prices. This makes it all the more difficult to predict what might happen in the current climate across the next weeks/months/years.

The motor industry has ground to a halt with both the production and sales of cars suspended. The watch industry is the same – both Rolex and Patek Philippe have halted production indefinitely. Whisky distilleries have followed suit, they are all closing down for the short to medium term. This may lead the logical amongst us to assume that due to a squeeze on supply the reaction would be a rise in value on the second hand markets. However at current, no one is sure where prices stand or how the long term value of luxury assets may be effected.

What is undoubtedly having an effect across all asset classes is the global lockdown. With an inability to move freely and social gatherings banned all across Europe and the further afield many if not all auction houses have been forced to stop operating – in the short term anyway.  Many retailers or traders of assets have been advised to shut up shop.  This all means that while the supply is dropping so is demand. Therefore it is a brave business that dips their hand in their pocket and buys in any assets – both WeBuyAnyCar and Watchfinder have stopped buying second hand cars and watches respectively. As such the uncertainty has lead this to be very much a buyers market. Anyone willing to buy can make an offer, which a month ago would’ve seemed a ridiculously low price, safe in the knowledge they are not competing with lots of different options. To sum it up, if the seller is adamant they need to sell they will be left will little to no option but to accept a low ball offer.

The reality is, unfortunately there will be individuals who have no other option but to maximise what they can achieve, and take what they can get for their prized possessions. However for those who are not in such a desperate position and quite simply it would be handy to raise a little against their asset as a short term small business loan, or indeed for those looking to buy some time to see how prices are impacted over the next few months, there is another option.

Edinburgh Asset Finance has been offering small business and personal loans against luxury assets for 7 years now. In this time they have been able to help many individuals raise much needed capital against personally owned assets. We do this by taking possession of the asset for the duration of the loan, and providing the client with a short-term flexible loan. The client is free to redeem the loan as early as they like, there are no early redemption penalty charges. The loan is entirely invisible to a credit check. The asset acts as the entire security and therefore we have no need to impact your credit file.  We can do this despite the uncertainty in the current market due to the fact we only ever loan a percentage of what the asset is worth. This means that we are insulated to an extent to any fluctuation in price. It also means that our clients, can in times of hardship, avoid a fire sale of assets.

To find out how we can help, get in touch with us today.